News ISSUE 16, SPRING 2016Wills, Probate, Estates & Trusts

It is not uncommon to beapproached by a friend or familymember who wants to borrowmoney or asks you to guaranteea loan he or she is taking. In manycases, your first reaction is toassist family or friends whenthey are in need. However,before you agree to help thereare five important points thatyou should consider.

1 If you give the guarantee and theborrower fails to service or repay theloan, you can expect to be called upon bythe financial institution to pay back thedebt. Therefore, consider insisting thata monetary limit be written into theguarantee. This will restrict the amountyou could be called upon to pay back,thereby reducing your financial exposure.

2 If the borrower is a beneficiary underyour will, the debt might need to berecovered by deduction from theborrower's entitlement if you were to diebefore the loan is repaid. If the borroweris married and the loan benefits a spouseas well, it may be prudent for the loan tobe documented as a loan to yourbeneficiary only.

3 If the borrower is one of your children,you should consider whether the terms ofthe loan advantages the borrower childunfairly. In particular, if the loan issizeable, long term and may be unrepaidwhen you die.

4 The mere fact that the borrower ownsa house does not give you a right to put acaveat on the house title. We suggestthat the loan agreement includes acharge or mortgage over the property.This will then allow a caveat to be lodged,if needed, in the future.

5 It is important to record in writing theterms of the loan. This should be signedby both parties detailing the amount,interest rate (if any) and any repaymenttriggers. This is important in case oneof the parties dies while the loan is stillon foot.

Whatever your decision, it is importantthat you access our advice before youeither lend money or agree to act asguarantor to others.

For further information on this topic,please contact contact John Henry onjhenry@tde.com.au

Lending money to family & friends

Tolhurst Druce & Emmerson Working with individuals, families & business.

Property Law

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What is a “foreign person”?Under Australian law, a “foreign person”is an individual who is not an Australiancitizen or permanent resident. Thesepeople require formal government approvalbefore purchasing Australian property.

Foreign Investment Review Board(FIRB)The Australian Government hasestablished the Foreign Investment ReviewBoard (FIRB). This authority reviews allapplications from foreign buyers toensure that they are eligible to purchaseAustralian property. Foreign corporationsor trustees of foreign trusts must alsoobtain FIRB approval.

What types of property can foreignpersons buy?Foreign persons are usually given FIRBapproval to purchase the following:

l New dwellingsThis includes house and land packages,“off the plan” apartments andtownhouses.

l Existing dwellings for redevelopmentExisting homes can only be purchasedif they are demolished andredeveloped within 4 years.

l Vacant landThis may be purchased for residentialdevelopment.

l Commercial real estateExisting commercial real estate is ableto be purchased by foreign buyers orcompanies.

Foreign buyers who hold temporaryresident visas are able to purchase oneestablished dwelling, as their place ofresidence, whilst living in Australia. Thisproperty must be sold when they leavethe country or when their visa expires.

What types of property cannot bebought by foreign persons?Foreign persons are unable to purchase:

l Existing residential property. Foreign buyers are unable to purchase existingresidential property to either live in,rent out, use as holiday homes or toleave unoccupied.

Propertypurchaseby foreignbuyers –what arethe rules?The popularity of Australianreal estate with foreignbuyers has been one ofthe most talked aboutdevelopments in our propertymarket in recent times. Butwhat are the rules and whattypes of Australian propertycan be purchased by buyersfrom overseas?

Tolhurst Druce & Emmerson Working with individuals, families & business.

Property Law News

For further information on this topic,please contact David Parsons ondparsons@tde.com.au

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Masters degrees enhance our expertiseWe are delighted to announce that two of our lawyers have been recentlyawarded Masters degrees.

Annette Esposito, a lawyer in our Wills, Estates & Trusts area, has graduatedwith a Masters of Applied Law. With majors in Wills and Estates, Annettecompleted her course through the College of Law. Faten Awad, a lawyer in ourLitigation & Dispute Resolution area, has also graduated with a Master of Laws(Commercial Law) from Monash University.

Both Annette and Faten enjoyed the indepth nature of their studies, whichthey have found to be directly applicable to their daily work. Congratulations toboth Annette and Faten on these significant achievements.

Tolhurst Druce & Emmerson – our historyTolhurst Druce & Emmerson has a proud history spanning 120 years.Our firm began in October 1896 when Charles Tolhurst and William Drucecommenced a legal practice under the name of Tolhurst & Druce. The firmwas located in the Melbourne Chambers at 418 Chancery Lane – which isnow Little Collins Street. Charles Tolhurst was a partner of the practicefor 28 years until his death in 1924. The firm then continued under thedirection of William Druce for a further 21 years.

In the 1930’s, Keith Emmerson was practising law under his own name in theOrient Line Building at 352 Collins Street. Upon the demolition of the MelbourneChambers in around 1938, Tolhurst & Druce moved into the same offices asKeith Emmerson. This move was conducted with the idea of an ultimateamalgamation of the two firms.

The relationship between the firms became even closer later in the 1930’swhen Francis Druce, (the son of William Druce) became the brother-in-lawand articled clerk of Keith Emmerson. Upon the death of our founding partner,William Druce in July 1945, the relationship changed again. At this time FrancisDruce went into partnership with Keith Emmerson and the name of the firm waschanged to Tolhurst Druce & Emmerson – a name which we proudly retain untilthis very day.

Advice to vendorsIf you are selling property we suggestthat your contract includes a clausestating that offers from overseas buyersare subject to FIRB approval, providingthe 30 days required for this to beundertaken.

Advice to potential overseas buyersThe Australian government has establishedstrict penalties for breaches of FIRB rules.Overseas buyers need expert legal adviceto guide them through the complex rangeof fees, taxes and regulatory complianceissues including the additional stampduties payable.

Irrespective of whether you are a vendoror potential buyer from overseas wesuggest you access our advice at an earlystage. This will ensure that your propertytransaction runs smoothly and complieswith all current legal and legislativerequirements.

New rules onidentificationRules on the identification ofindividuals purchasing property havenow been upgraded due to issuesrelated to identity theft.

Lawyers must now undertake reasonablesteps to verify the identity of individualsand corporate entities involved inproperty transactions. This must takeplace before any documents, such as atransfer of land, can be lodged withLand Victoria.

Either our lawyers, or an approved thirdparty agent, must conduct a face to faceinterview to sight and verify originalidentification documentation.

Tolhurst Druce & Emmerson Working with individuals, families & business.

Business & Commercial Law

For further information on this topic,please contact David Phelan ondphelan@tde.com.au

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In the digital age, the redundancy,termination or resignation of staffcan have significant consequencesfor the protection of yourintellectual property (IP).

To assist you, we have prepared achecklist of ten ideas to get your IPprotection off on the right footing.

IP protection checklist

1 Develop and document a well drafted internal IP policy.

2 Disseminate and train staff in your policy.

3 Ensure employment contracts include appropriate clauses that address the following issues – non disclosure of confidential information, IP protection,restraint of trade and non-solicitation of staff and customers.

4 Keep a list of holders of security-related items including swipe cards, keys,name badges and security tags.

5 Keep a list of everyone with digital access by way of email accounts, desktopand server logins, and remote access, including all active passwords.

6 Keep a list of who has been issued company-owned electronic devices,i.e. laptops, phones etc.

7 Document all IP assets including customer, client and vendor lists,confidential papers, inventions, pricing documentation and trade secrets.

8 Keep a list of who has access to what levels of corporate information.

9 Ensure all exit interviews and letters include information on employeeIP obligations.

10 Have a robust process in place for employee departures. This would includecollection of security items, electronic devices, terminating and redirectingemail accounts, changing passwords, door codes, security alarms, disablingremote access and offsite security escort.

Protecting your Intellectual Property

What you should doIf you are in any doubt, obtainprofessional legal and IT advice.

We can undertake an IP reviewand draft internal policies toprotect your business. If required,we can provide strategic advice onthe best way to handle individualsituations where your IP mightbe at risk.

Tolhurst Druce & Emmerson Working with individuals, families & business.

Family Law

Relationship breakdown is a difficultand draining experience. Finalisingarrangements for the propertyeach party owns or controls isan important step in ending thefinancial relationship betweenyou and your former partner.What steps are involved?

What is a property pool?Over the course of a relationship, assetsand liabilities are accumulated by couples.These can be acquired individually, jointlyor through family trusts or companies.This is called a property pool.

Assets can be extensive and may include:l real property (i.e. the family home)l money (i.e. cash in bank accounts)l investments (i.e. shares & trusts)l superannuationl insurance policiesl family businessesl other items; such as cars, boats, household items and jewellery

Liabilities can be complicated and mayinclude:l mortgagesl loansl credit cardsl personal debtsl business debts

Negotiating a property settlementOur lawyers assist you to locate allassets and, if needed, obtain professionalvaluations of them. We negotiate thedivision of the property pool by way ofa property agreement with your formerspouse or partner. If both parties arehappy, we formalise the agreement toachieve a final property settlement. Thisbecomes legally binding once it is putinto Consent Orders and filed at theFamily Court or a binding financial agree-ment is signed. If an agreement cannotbe reached, proceedings can then beissued through the Courts.

The importance of acting quicklyWe advise our clients to act quickly toeffect a property settlement with theirformer partner. The reasons for this include:

1 Keeping the family homeIt is often a priority for one party to retainthe family home. This can provide stabilityfor the children, allowing them to continueto attend their school and have the supportof their neighbourhood friends andactivities. Due to the rapidly rising costsof residential real estate, particularly inMelbourne’s eastern suburbs, it is ouradvice that you act quickly to secure aproperty settlement before the propertyincreases in price, if you are wanting toremain in the home.

2 Protection from a new relationshipIt is not uncommon for people to quicklyrepartner after separating. This can causesignificant issues if a property settlementhas not been reached. Financialcomplications arise when one partyacquires assets with a new partner, or ifchildren are born of the new relationship.

How long do I have to issue propertyproceedings?If you are married and have property thatneeds to be divided, the law specifies thatyou have 12 months from the date ofyour divorce to commence Courtproceedings; otherwise it is necessaryto make an Application for Leave to issueproceedings out of time. If a long time haselapsed since separating each party’sfinancial position may have changedsignificantly which complicates negotiatinga settlement.

For defacto couples, any property divisionproceedings must be issued with theCourt within 2 years of separation. Thereare exceptions, which require a separateapplication, if you are outside of thesetime constraints.

To ensure your rights are protectedand your legal situation is optimal - it isimportant to seek our advice quickly. See us before you separate, or as soon asyour relationship breaks down.

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Getting your fair share in a property division

For further information on this topic,please contact Randall Bradshaw onrbradshaw@tde.com.au or EilishCooke on ecooke@tde.com.au

News

Peter Weller answers your legal questions.

Q If I make a loan to a borrower and we don’t agree on a specific repayment date,how long do I have to sue the borrower if they don’t pay me back?

A In this scenario, the time limit for commencing a proceeding is 6 years. The 6 yearperiod starts to run on the date that the loan is made. There are circumstances inwhich the time limit can be extended if the borrower acknowledges the debt in asufficiently certain manner. If proceedings are not issued within the 6 yeartimeframe, then you can no longer sue for repayment.

Tolhurst Druce & Emmerson Working with individuals, families & business.

Tolhurst Druce & Emmerson incorporates the firms of Gavan Duffy & King, Doyle & Kerr,Puglisi, Heffey & Pavlidi, Louis S Lazarus, and D Condon & Co. If you wish to changeyour contact details or no longer wish to receive this publication, please contact our office

on (03) 9670 0700.

The information in this newsletter is not intended to be a complete statement of the lawrelating to the issues raised. Accordingly, no person should rely on this information without

obtaining specific advice from lawyers. Liability limited by a scheme approved under Professional Standards Legislation.

Tolhurst Druce & Emmerson

Level 3, 520 Bourke StreetMelbourne VIC 3000Telephone 03 9670 0700Facsimile 03 9670 8503www.tde.com.au

Tolhurst Druce & Emmerson Level 3, 520 Bourke Street, Melbourne T 9670 0700 www.tde.com.au

Litigation & Dispute Resolution

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Visiting our officesWe always look forward to meeting ourclients when visiting us at our city office.

We are located in one of Melbourne’shistoric bluestone buildings on Level 3,520 Bourke Street. Positioned on thecorner of Bourke and William streets,we are an easy walk from either Flagstaffor Southern Cross railway stations. Weare also well served by Melbourne’s tramnetwork, which can drop you right to ourdoor! Situated in the heart of the legalprecinct, we are close to the Courts andother expert legal counsel.

Our office hours are 9am – 5.30pmMonday to Friday. A warm welcomeawaits you at TDE.