Why are they still at it? Last Tuesday, the Federal Court fined Australian franchisor Allfones $45,000 after finding it guilty of contempt of court by reason of its breach of an undertaking given to the Court in 2008. Here's the Court's judgment. Here's the ACCC's press release.
I've previously noted aspects of this saga here and here.
Eventually, and as a consequence, the company's chief executive's contract was terminated and he was escorted out of the company's headquarters, as reported here, earlier this year.
What does it take to send the message once and for all? If fines totaling $3 million hasn't done it, will a $45,000 fine do?
Back to to the present case, the judge said 3 contempts were serious, and that the conduct engaged in by Allfones' senior personnel, contrary to the undertakings, was deliberate!
With this history, I wonder why would one want to be their franchisee?
I almost always advise prospective new franchisees, as part of their assessment of an intended purchase, to speak to as many as possible of current and past franchisees of the franchise system they're contemplating - the feedback they get is often more telling about the system and support, than the documents and sales spin.
21 July, 2011
09 June, 2011
Big retailer franchisees should've known better - fines are a reminder to small businesses too - be aware of your consumer laws obligations
Like many suburban law practices, I have my fair share of small to medium sized business clients. A subject that regularly comes up are many of the obligations of business owners under various competition and consumer laws. The ones most referred to are under the Commonwealth's Competition and Consumer Act (previously called the Trade Practices Act).
Many are aware of the extent of these laws. Take wholesale for instance. Generally, a supplier of goods to a retailer can't tell a retailer the price the retailer must sell the item for - it's anti-competitive. That's why on many goods or catalouges you often a phrase "recommended retail price". Then there are laws about false and misleading advertising, collusion, exclusive dealing, and the list goes on.
Part of a lawyer's role in certain cases is, I feel, not only to provide advice, but also to educate. Many clients appreciate it and hopefully I've done my bit to help them avoid potential trouble!
What does surprise me is when bigger players should've known better - usually because they're far more experienced and have the resources to keep their operators and franchisees informed and in line. This week we learn from a ACCC report that 6 West Australian Harvey Norman franchisees were fined for engaging in a bait-and-switch practice. It's where one advertises a great deal on a product, you get there, and because they originally held only a very small number of the items, you're told something like "sorry, we've sold out" and then they try to sell you another, often higher priced, item. In this WA case, it's reported these particular franchisees didn't even stock the advertised products (cameras) in the first place!
Competition laws apply to big AND small businesses. The penalties are substantial. If you're unsure how certain practices in your business stack up, I suggest you play it safe and get advice sooner rather than later.
12 May, 2011
Selling a property in or near Liverpool soon? Consider this offer about a contribution to a worthwhile charity!
Macquarie Real Estate is a local real estate agent located in Casula, near Liverpool NSW. Yesterday its principal, Joe Romeo, informed me of the following offer he’s making.
Any property listed with his agency before 30 June 2011 that results from a referral from such as what I’m doing here in this blog, when that property is sold (even if it’s after 30 June 2011) he’ll donate 20% of his commission to a charity nominated by us. You need to mention to them how you heard about the offer when you sign up.
If you take up this offer, sell the property through them, and mention you heard about it here, I’d be more than happy to discuss with you and come to an agreement about a worthwhile charity you’d like me to direct to have Joe’s donation sent to.
What’s the catch? Apart from the agent getting a listing (and most sellers list the property they’re selling with an agent anyway) there isn’t one! I don’t receive any payment, gift, commission or special favour (and I never have). There’s no condition about which solicitor you use either.
Have a think about it. Better still, if you’d like to ask me about Joe and his team, give me a call.
Any property listed with his agency before 30 June 2011 that results from a referral from such as what I’m doing here in this blog, when that property is sold (even if it’s after 30 June 2011) he’ll donate 20% of his commission to a charity nominated by us. You need to mention to them how you heard about the offer when you sign up.
If you take up this offer, sell the property through them, and mention you heard about it here, I’d be more than happy to discuss with you and come to an agreement about a worthwhile charity you’d like me to direct to have Joe’s donation sent to.
What’s the catch? Apart from the agent getting a listing (and most sellers list the property they’re selling with an agent anyway) there isn’t one! I don’t receive any payment, gift, commission or special favour (and I never have). There’s no condition about which solicitor you use either.
Have a think about it. Better still, if you’d like to ask me about Joe and his team, give me a call.
10 May, 2011
Lender’s mortgage insurance premiums - One way to “make” some money back!
While the typical average Australian home loan term is around 25 to 30 years, the average length of a home loan is reported to be 5 years, some say even as low as 3½ years. If these figures are averages, there must be many loans that are discharged much sooner. In my experience, it’s becoming rarer for a home buyer to live in the one home for lengthy period of 20 years or more. Australians buy and sell their homes for a variety of reasons: to improve their lot; so called sea changes and tree changes; moving to where the jobs are; moving out when jobs are gone….
So, the issue is, while home loans are typically designed for the long term, most often borrowers barely last the distance. Many borrowers are also required to pay their lender’s mortgage insurance premiums. This insurance covers the lender, not the borrower, but it’s the borrower who pays the insurance bill. I’ve seen such premiums as high as $18,000, but typically are around the $4,000 to $8,000 mark.
The premiums are a once only payment, providing cover for the term of the loan… remember, terms that are assumed to be for 20 to 30 years! But many of these loans are discharged within 5 years.
So, what happens for that part of the premium covering the term of the loan that’s no longer there? Nothing, unless you do something about it!
Have you ever sold a car and then obtained a part refund of your insurance premium when you cancelled your insurance cover? It’s a comparable situation.
Many lenders don’t tell you, but in most cases you can do something similar regarding lender’s mortgage insurance premiums you’ve paid if you pay off your home loan early. The earlier it’s paid off (for example, you’ve sold the property) the greater the chance of a significant refund of part of the previously paid premium.
The refund amount varies, and many factors can affect it. For example, whether the borrower has defaulted, how many (or how few) years of the loan have passed, but it can be up to 40 to 50% of the original premium!
It’s the mortgage insurer that ought to be approached, rather than the lender, but if you’re about to borrow and a lender’s mortgage insurance premium is payable, it would be very prudent to clarify with your lender their policy on refunding mortgage insurance premiums. Be prepared to be firm and press for an answer. Many lender’s staff and some brokers aren’t even aware of this, so they may need encouraging to find out more for you.
So, the issue is, while home loans are typically designed for the long term, most often borrowers barely last the distance. Many borrowers are also required to pay their lender’s mortgage insurance premiums. This insurance covers the lender, not the borrower, but it’s the borrower who pays the insurance bill. I’ve seen such premiums as high as $18,000, but typically are around the $4,000 to $8,000 mark.
The premiums are a once only payment, providing cover for the term of the loan… remember, terms that are assumed to be for 20 to 30 years! But many of these loans are discharged within 5 years.
So, what happens for that part of the premium covering the term of the loan that’s no longer there? Nothing, unless you do something about it!
Have you ever sold a car and then obtained a part refund of your insurance premium when you cancelled your insurance cover? It’s a comparable situation.
Many lenders don’t tell you, but in most cases you can do something similar regarding lender’s mortgage insurance premiums you’ve paid if you pay off your home loan early. The earlier it’s paid off (for example, you’ve sold the property) the greater the chance of a significant refund of part of the previously paid premium.
The refund amount varies, and many factors can affect it. For example, whether the borrower has defaulted, how many (or how few) years of the loan have passed, but it can be up to 40 to 50% of the original premium!
It’s the mortgage insurer that ought to be approached, rather than the lender, but if you’re about to borrow and a lender’s mortgage insurance premium is payable, it would be very prudent to clarify with your lender their policy on refunding mortgage insurance premiums. Be prepared to be firm and press for an answer. Many lender’s staff and some brokers aren’t even aware of this, so they may need encouraging to find out more for you.
16 April, 2011
A little will power now, can save rather a lot later...
If you want to leave someone out of a will, the costs later may be very much higher than expected.
I regularly advise and prepare wills for clients – nothing unusual about that for a suburban law office. Many times my advice includes that in making their will, they consider its effect on those left behind, particularly their loved ones, after they’re “gone”. That might include thinking about the bigger picture rather than concentrating too much on getting back at someone. This can be difficult for clients, especially when some emotion is involved and we can’t access a crystal ball that works!
For a long time we’ve all had rights and freedoms to deal with our property as we see fit for that day we’re no longer here. But those rights and freedoms need to be exercised with other laws in mind that allow certain people who feel they’ve missed out from a share, or a bigger share of an estate, to ask the court to effectively adjust the will’s distribution of a deceased person’s estate.
For example, clients with modest to substantial estates may make little or no provision for one of their children. Reasons can include estrangement, perceived drug issues, assumed wealth, even not getting a Christmas card! My advice to the will maker in these cases is to inform of some consequences they may not have considered… such as exposing the estate to possible unintended but costly litigation.
An article in today’s Sydney Morning Herald describes a situation that I’ve encountered, unfortunately, many times – the risk of very high legal costs because the will maker, for whatever reason, didn’t make a gift to someone who probably expected a fair provision.
If you want to leave someone out of a will, the legal costs payable by your estate later may be very much higher than expected.
Each individual’s situation is different but if this sounds too familiar to your situation, a little prevention now, such as making a gift in a will that you may not have originally intended or wanted, can be a small cost now to help reduce the risk of much, much higher costs later. Does this sound like you? Have a chat with your solicitor about it!
I regularly advise and prepare wills for clients – nothing unusual about that for a suburban law office. Many times my advice includes that in making their will, they consider its effect on those left behind, particularly their loved ones, after they’re “gone”. That might include thinking about the bigger picture rather than concentrating too much on getting back at someone. This can be difficult for clients, especially when some emotion is involved and we can’t access a crystal ball that works!
For a long time we’ve all had rights and freedoms to deal with our property as we see fit for that day we’re no longer here. But those rights and freedoms need to be exercised with other laws in mind that allow certain people who feel they’ve missed out from a share, or a bigger share of an estate, to ask the court to effectively adjust the will’s distribution of a deceased person’s estate.
For example, clients with modest to substantial estates may make little or no provision for one of their children. Reasons can include estrangement, perceived drug issues, assumed wealth, even not getting a Christmas card! My advice to the will maker in these cases is to inform of some consequences they may not have considered… such as exposing the estate to possible unintended but costly litigation.
An article in today’s Sydney Morning Herald describes a situation that I’ve encountered, unfortunately, many times – the risk of very high legal costs because the will maker, for whatever reason, didn’t make a gift to someone who probably expected a fair provision.
If you want to leave someone out of a will, the legal costs payable by your estate later may be very much higher than expected.
Each individual’s situation is different but if this sounds too familiar to your situation, a little prevention now, such as making a gift in a will that you may not have originally intended or wanted, can be a small cost now to help reduce the risk of much, much higher costs later. Does this sound like you? Have a chat with your solicitor about it!
07 April, 2011
Quality practice, better service...
Alvaro Edwards Solicitors is a quality endorsed legal practice. But don't just take our word for it!
SAI Global just completed its second Triennial Recertification Audit of Alvaro Edwards Solicitors' quality management system. I'm proud to announce that with the support of all management and staff, we have again achieved quality standards recertification to Legal Best Practice ISO 9001/LAW 9000 - a certified standard we first attained in 2005 and continuously maintained since. Our licence number is LAW20005; Alvaro Edwards Solicitors is one of the earliest law firms to achieve this standard in NSW.
The recent audit report states:
The firm continues to maintain and regularly update the quality management system and supporting procedures to reflect preferred best practice in the provision of quality services to its clients.
The quality system benefits the way we run our business but importantly, it translates into a commitment to better serving our clients.
The process is an ongoing one, and our journey doesn't end with the recent audit. I'm always conscious of the need to continually improving our processes and serving our clients.
The SAI Global certification process provides an outside independent auditing and certification structure for quality systems to ensure compliance with international quality standards.
24 March, 2011
The prospect of cheap beer sure did taste good...
Recently it was milk, and now its beer! It appears that the country's two giant supermarket chains were about to start a price war on beer by selling cases for less than the wholesale cost. This seems to me be a variation of the old "loss leader" practice where a retailer deliberately makes a loss on a product in the expectation the great deal will attract customers and once in the retailer's store, the customer is likely to spend more on other goods.
In the case of the looming beer price war, it seems it's might be no more. Foster's has refused to supply these supermarket giants. While cheap price beer is a tasty prospect, I guess Foster's sees such gross discounting as likely to cheapen its brand image.
But hang on. Under our trade practices laws, a supplier can't withhold or threaten to withhold supplying goods if the retailer refuses to sell at a particular price. This is an offence known as resale price maintenance.
But there's more. In certain limited cases, this practice is actually allowed. Just after the provisions prohibiting resale price maintenance in the Competition and Consumer Act (previously, the Trade Practices Act) it provides certain exceptions in cases where "…goods obtained... from the supplier at less than their cost…"
And that's the catch!
18 September, 2010
Buying off the plan on again?
A headline in Sydney’s major broadsheet newspaper today succinctly declares “Off-the-plan unit sales run hot”.
If you’re considering taking advantage of buying a property “off the plan, It’s probably timely to take a deep breath, not get caught up in any hype, and just recall some of the pitfalls that can and do occur.
One claimed benefit of buying off the plan is that some consider it a good opportunity to purchase at a price that is more likely to be considered a bargain when the property is eventually developed and the purchase completed. The time from contract date to completion often won’t take place for several months, if not a year, or two, or three!
So what are what are some potential issues?
The completion date – how does the contract define it. More importantly, what obligations, if any, are on the developer to comply, and how can it be extended. What rights does the buyer have to get of a deal that keeps getting delayed? Can you as buyer get stuck with a deal that’s gone sour and delayed by years?
Do you know exactly what you’re getting? Really, do you? Is the quality of appliances comparable to those in the brochure or display unit? What about dimensions? What scope is there for variations between the dimensions in the contract and what ends up built? Can you end up being stuck buying a butter box rather than the penthouse you expected? Are the tennis courts and swimming pool part of a later stage, one that may take years to develop, if ever?
Don’t forget your deposit bond. These have expiry dates. A buyer can unintentionally be in breach if the bond expires, because of continued delays.
Then, of course, there are building defects - how are these defined; what obligations are on the developer and the buyer?
Lots of questions, but few answers I’m afraid. These are all real issues that do arise, and often in off the plan purchases. Sure, they can arise in any property purchase, but buying off the plan is something akin to buying vapourware.
17 January, 2010
Forcing strata owners to sell
There has been discussion in some circles for a while now about forcing minority owners of strata property to sell their units if, for example, three quarters of the owners in the particular strata plan want to do so. Here's an article by Paul Bibby in yesterday's Sydney Morning Herald that gives a good summary of the issue and at least the point of view of developers.
The example cited in the article is fairly typical "...one of the 16 owners - an 80-year-old woman who is refusing to leave because she has convinced herself that she'll die if she does - is refusing to sell, everyone is stuck there while the whole block gradually falls to the ground...".
Most of the points of view I've seen so far are from the perspective of developers and majority owners. I can quite understand their views; I know of an owner of a small shop in a small commercial strata complex. who just cannot sell his small strata shop to a very willing developer. There's about 7 or 8 owners. The site's old, the individual shops are tired looking though still all trading, but its crying out for development (read "bulldozed"!). There have been a number of approaches by developers in recent years but all proposals stalled due to the refusal of one shop owner who's very happy with his business and how things are.
Whilst at first glance the proposals appear reasonable, I haven't yet seen arguments from the minority point of view.
Take the example cited about the elderly woman. She has her home, presumably she fully owns it and is happy to remain there, and she has some fears if she's forced to move. No doubt she's also built up a network of friends, services and care professionals she relies upon in her day to day living. Perhaps she's not happy with offers made too. Why should she be forced to yield to the other owners and developers? If forced to sell, even if she gets a fair price, what's to say she can afford to purchase or move into another comparable property. The Property Council proposes measures to safeguard the rights of owners like her, but what about her right to stay put?
I guess another way of asking this is, how is the position of the unyielding strata owner different from the position of a home owner who refuses to sell their house on a suburban block to a major developer notwithstanding pressure from all their neighbours? As far as I'm aware, except in the case of a compulsory property acquisition by a public authority, there's no way to force a law abiding property owner to sell their property to a developer.
I'm not advocating no change, but it's only fair that all views are considered and fairly considered and dealt with.
It may not affect many of us but if the proposals succeed, what's to stop developers sometime in future moving legislate for the forced sale of your home or farm?
The example cited in the article is fairly typical "...one of the 16 owners - an 80-year-old woman who is refusing to leave because she has convinced herself that she'll die if she does - is refusing to sell, everyone is stuck there while the whole block gradually falls to the ground...".
Most of the points of view I've seen so far are from the perspective of developers and majority owners. I can quite understand their views; I know of an owner of a small shop in a small commercial strata complex. who just cannot sell his small strata shop to a very willing developer. There's about 7 or 8 owners. The site's old, the individual shops are tired looking though still all trading, but its crying out for development (read "bulldozed"!). There have been a number of approaches by developers in recent years but all proposals stalled due to the refusal of one shop owner who's very happy with his business and how things are.
Whilst at first glance the proposals appear reasonable, I haven't yet seen arguments from the minority point of view.
Take the example cited about the elderly woman. She has her home, presumably she fully owns it and is happy to remain there, and she has some fears if she's forced to move. No doubt she's also built up a network of friends, services and care professionals she relies upon in her day to day living. Perhaps she's not happy with offers made too. Why should she be forced to yield to the other owners and developers? If forced to sell, even if she gets a fair price, what's to say she can afford to purchase or move into another comparable property. The Property Council proposes measures to safeguard the rights of owners like her, but what about her right to stay put?
I guess another way of asking this is, how is the position of the unyielding strata owner different from the position of a home owner who refuses to sell their house on a suburban block to a major developer notwithstanding pressure from all their neighbours? As far as I'm aware, except in the case of a compulsory property acquisition by a public authority, there's no way to force a law abiding property owner to sell their property to a developer.
I'm not advocating no change, but it's only fair that all views are considered and fairly considered and dealt with.
It may not affect many of us but if the proposals succeed, what's to stop developers sometime in future moving legislate for the forced sale of your home or farm?
09 January, 2010
Liverpool - in Sydney's south-west - again tops first home grants
The latest NSW Office of State Revenue data shows that again, the area (by postcode) receiving the most first home benefits in NSW (both in terms of total grants and total value of the grants) are made to buyers in Liverpool, in Sydney's south-west.
In the 12 month period to 30 November 2009, there were 1,345 first home grants received in the Liverpool area totalling over $19.9m. There were slightly more recipients of benefits under the NSW First Home Plus scheme, which includes stamp duty exemptions in addition to the grants. When the First Home Plus benefits are included, the total value of benefits to first home buyers in NSW totalled over $33.9m for the same period.
From when the grant scheme commenced on 1 July 2000 to 30 November 2009, Liverpool also tops the list, with 8,097 grants. This is significantly more than the area with the next highest recipients, Wentworthville, with 5,603.
I understand the national figures published by the ABS are scheduled to be published this month.
In the 12 month period to 30 November 2009, there were 1,345 first home grants received in the Liverpool area totalling over $19.9m. There were slightly more recipients of benefits under the NSW First Home Plus scheme, which includes stamp duty exemptions in addition to the grants. When the First Home Plus benefits are included, the total value of benefits to first home buyers in NSW totalled over $33.9m for the same period.
From when the grant scheme commenced on 1 July 2000 to 30 November 2009, Liverpool also tops the list, with 8,097 grants. This is significantly more than the area with the next highest recipients, Wentworthville, with 5,603.
I understand the national figures published by the ABS are scheduled to be published this month.
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