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It is not uncommon for private companies to make loans to their directors, and for those loans to to be made without any formal agreement.  It is also not uncommon for those loans to remain unpaid for a period in excess of six years.  A question then arises as to whether recovery of the loans is statute barred.  This can have serious ramifications, first as to whether the director is responsible to repay the loan, as an example if the company is placed into liquidation, and second, whether it has triggered any adverse issues due to debt forgiveness. Leaving aside arguments that a director might be responsible regardless for preferring their own interests to those of the company or failing to act reasonably as a director in not causing the company to recover the debt or at least obtain an acknowledgment, another question arises as to whether the limitation period has been extended because of any acknowledgments of indebtedness made by the director, triggering the extensions of the limitation period provided in section 35 of the Limitations of Actions Act (Qld).  In this regard, it is also important to note that in Queensland, an acknowledgment of debt can re-enliven the limitation period even after the limitation period had expired (this is not the case in some other jurisdictions).  The Queensland District Court recently considered whether the annual accounts of the company – signed by the director and noting the loan – were a sufficient acknowledgment of the debt to trigger the restarting of the limitation period.  On the facts, and having regard to the type of accounts, His Honour Porter KC DCJ considered that the accounts comprised an acknowledgment made by the director to the company in respect of the debts owed by the director to the company shown in the accounts.  The director’s opposition to recovery on the basis that it was statute barred failed. The decision (Commercial Images (Aust) Pty Ltd (in Liq) v Manicaros [2023] QDC 77) provides a very useful discussion of law relating to acknowledgments of debts, and then applies that discussion to a number of factual scenarios.   It is not uncommon for directors to take money out of companies by characterising the payments as loans to them rather than salary.  Doing so however carries a number of risks, one obvious risk being that if the company is put into liquidation or control of it is lost, then the loan can be called up. For advice in respect of company loans, contact Peter Muller at peterm@qbmlaw.com.au

Recently there have been numerous construction companies shutting down building sites and going into external control, such as administration or liquidation. If you are a subcontractor or contractor that is owed money by a construction company, it is imperative to act quickly to secure progress payments owing. One option is for subcontractors to serve a subcontractor’s charge to secure monies owing by a construction company under the Building Industry Fairness (Security of Payments) Act 2017. Unfortunately, helping out a builder by accepting payment arrangements can have serious ramifications if the builder is later put into liquidation. In some instances, a liquidator might seek to have repaid anything received within the 6 month period prior to liquidation. We can assist with all aspects of recovery of monies owing under the Building Industry Fairness (Security of Payments) Act 2017. If you are owed money by a construction company, it is time to act now. Justin Mathews is a registered Adjudicator for building claims in Queensland and the Northern Territory and specializes in building and construction law. You can contact him by email justinm@qbmlaw.com.au or 5574 0111.

With mobile phone detection cameras deployed, a number of drivers complain that they have been penalised even when the phone is not in use. The penalty itself is contained in section 300 of the Transport Operations (Road Use Management – Road Rules) Regulation 2009 https://www.legislation.qld.gov.au/view/html/inforce/current/sl-2009-0194 – otherwise known as the “Queensland Road Rules”. Section 300 provides that a driver must not use a mobile phone while the vehicle is moving or is stationary but not parked.  The Transport Operations (Road Use Management) Act 1995 defines “Park” as meaning “incudes stop the vehicle and allow the vehicle to stay, whether or not the driver leaves the vehicle”.  There is a question over whether a vehicle has to be turned off to be “parked” in particular a manual vehicle. Also it should be noted that there are further restrictions for drivers on provisional licenses. In any event, section 300 clarifies that: There are further provisions in section 300 relevant to using the phone for the production of identification or to obtain or use money (eg in a drive through situation), or for uses of bicycles or personal mobility devices.  So is a smart watch a mobile phone? Unfortunately the regulation does not say what is or is not a mobile phone. It excludes a CB or two way radio, so it clearly isn’t intended to be limited to a traditional telephone. And a smart watch performs the same functions as a mobile phone – calls, texts, emails, media player. And it could be every bit as distracting. So if one then assumed that a smart watch is a mobile phone, would wearing one offend section 300? Well it isn’t in the driver’s hand. Is it “resting” on the driver’s body, if it is strapped to the wrist? If it is, then wearing a smart watch while driving would be using a mobile phone. Oddly enough, it has been reported that Queensland Road Rules do not deal with smart watches. that would not necessarily be consistent with a literal reading of section 300, and assumes that a smart watch is not a mobile phone. The miscellaneous provisions of the road rules (sections 288 to 300E) cover a number of other interesting situations including:

In February 2023, the Queensland Government announced proposed changes to Body Corporate legislation which would “make it easier for units to be redeveloped”.  The background is that, when looking to sell all units in a Body Corporate complex so that a developer can redevelop the site, it is common for there to be a small number of “hold outs” who will refuse to sell, whether at all or at a particular price. Hold outs may not necessarily be acting out of greed or opportunism.  Often, people are particularly happy with a modest apartment due to its location, and could not afford to buy elsewhere in a similar location.  Some people might have a sentimental attachment to a building that they are in, and it might meet their needs perfectly.  Further, there are a number of reasons why contracts usually proposed by developers for the assembly of a development site (ie for all of the units in a building) might not necessarily be attractive.  They generally contain terms which favour the developers.  Most will be subject to conditions such as the obtaining of satisfactory development approvals, which might not be achieved for a few years.  Then they would generally be conditional upon the settlement of all other lots, a condition which might fail for any number of reasons.   As a consequence, an offer to buy a unit by a developer – even if for a price premium – will often involve very unattractive terms, and lead to significant uncertainty such that the owner would be unable to plan for some years not knowing whether or not the contract would settle.  Furthermore, a price that was attractive at the time of the signing of the contract might be particularly unattractive one to three years later once all conditions are satisfied.  In addition, even if the contract is unconditional, many are entered into by special purpose vehicle companies with no assets meaning that if the contract fails and the buyer does not settle, the seller is left with no remedy. Against those matters, the Queensland Government is proposing to amend the Body Corporate legislation to allow (indirectly) for owners to be compelled to “sell”.  I’ve put the word “sell” in inverted commas because that is not what is proposed.  Instead, what would happen is that, if 75% of owners or more supported the termination of the scheme itself on the basis of an agreement that it is more financially viable for lot owners to terminate rather than to maintain or remediate the scheme, then the scheme is terminated which has the result that the freehold interests are lost, and the Body Corporate itself then is the owner of the entire site which it can sell.  This would have the result that (say) a scheme in which there had been 50 lots, all individually owned by different owners will have (post termination) 1 lot with those 50 owners all holding as tenants in common proportionate to their interest schedule lot entitlements.  If the owners could not agree on the sale, then an external trustee would have to be appointed to facilitate the sale, with the owners to eventually receive their share of the proceeds after expenses.  The proposed amendments (which have not been published) would need to deal with transparency and allow for remedies to be available to allow for an independent assessment of what is or is not financially viable.  The draft legislation is not yet available. For advice in relation to community titles scheme and contracts generally, please contact Peter Muller at peterm@qbmlaw.com.au, Jessica Murray at jessicam@qbmlaw.com.au or Megan Hanneman at meganh@qbmlaw.com.au