Business Law Archives - Page 7 of 9

Clawback of leasing incentives

February 28, 2025
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Back in 2014, QBM Lawyers successfully applied to dismiss proceedings claiming the clawback (repayment) of over $1M in leasing incentives which were claimed to be repayable because of the termination of the lease. This was in the matter of GWC Property Group Pty Ltd v Higginson [2014] QSC 264 (“the GWC Decision”). Common kinds of lease incentives are rental discounts, or fitout contributions. The GWC Decision was and remains significant because clawback provisions in incentive deeds (or in the lease itself) are frequently used by landlords to attempt to recover incentives paid, and the decision made it clear that at least in some circumstances – and depending upon the effect of the clawback provision – the obligation would be void and unenforceable as what is known in legal terms to be a “penalty”. The GWC Decision has been referred to in a number of subsequent court decisions in courts and Tribunals in Queensland and other states. In 2023, the Queensland Supreme Court in the matter of BMG SP Pty Ltd v YFG Strathton Pty Ltd [2023] QSC 52 held that the obligation to repay a proportion of the fitout contribution was unenforceable as penalties, with the result that the Plaintiff’s claim in those proceedings of $993,607.29 were not recoverable. The decision relied substantially upon the reasoning of Her Honour Justice Dalton in the GWC Decision. The fact that an obligation is unenforceable because it is a penalty does not necessarily mean however that the lessor is left without any remedy at all. Even if a lease incentive could not be claimed back because it would be a penalty, the lessor in many cases can still sue the lessee and guarantors for damages for the breach or termination of the lease if that is the event that gave rise to the obligation to pay the incentive. In the GWC proceedings, the lessor was left with no remedy at all because the lease did not have guarantors (whereas the incentive deed did) and the tenant was in liquidation. Those circumstances however were usual. In most cases, the inability to claim the clawback of lease incentives if they were a penalty would still leave the landlord with remedies against the tenant and any guarantors for its losses consequent upon the breach of the lease. For advice in relation to leasing and lease disputes, please contact Peter Muller at peterm@qbmlaw.com.au and Jessica Murray at jessicam@qbmlaw.com

Seller forced to pay $1,650,000 commission on failed sale

February 21, 2025
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In an earlier news article, we discussed the risks of sellers blindly signing agent’s appointments which often incorporate provisions requiring the seller to pay commission on sales which have not settled. The REIQ standard terms for agent’s appointments contain that quite hazardous obligation, together with other provisions which might excite the interest of the seller’s lawyer if the seller thought to take advice before signing the Form 6. A particularly vivid demonstration on this occurred in the matter of Trappando Pty Ltd v Sunshine Group Pty Ltd [2023] QSC 87 in which the seller was found liable to pay their agent’s commission in the sum of $1,650,000 for a sale: Briefly, the circumstances were that the agent was appointed by the Defendant by a Form 6 appointment, which relevantly provided that the commission would be (where there was a sale price over $6,300,001 plus GST), the amount of the sale price over $6M plus GST. The appointment went on to include the usual REIQ standard terms which provide that commission is payable: The agent introduced a buyer at a contract price of $7,500,000. Under the terms of that contract, a deposit of $750,000 was paid. The seller terminated the contract, claiming to be entitled to the deposit of $750,000. The agent claimed to be entitled to commission being $1,650,000. The obvious outcome is that the agent was claiming commission some $900,000 in excess of the deposit. Ignoring for the time being the question of whether or not the seller could sue the buyer for that $900,000 as damages for breach of contract (there being some question in our mind about that given that the terms of the agent’s appointment were quite unusual), the buyer was put into external management and remained so, with at least some likelihood that there would be difficulties in any attempt to recover against it, and the result that the seller could well be $900,000 out of pocket for sale that did not proceed. The seller appealed the decision, but was unsuccessful yet again, failing to disturb the order that it paid the entirety of the commission. This decision reflects the risks of signing Form 6 appointments to act which allow the agent to be paid commission in circumstances other than the settlement of the contract. It also demonstrates the risks of a significant success fee being built into the agent’s commission, in those circumstances. For advice in relation to agent appointments, please contact our property lawyers Peter Muller at peterm@qbmlaw.com.au and Jessica Murray at jessicam@qbmlaw.com

August 30, 2024
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As of 26 August 2024, national system employees of non-small business employers (mainly employers of 15 or more employees, including in associated companies) have a “right to disconnect”. This right applies to employees of small business employers (14 or less employees) as of 26 August 2025. The Fair Work Commission published a draft of the right insofar as it would apply to the Business Equipment Award 2020 in July 2024. That draft notes that section 333M of the Fair Work Act provides that unless it is unreasonable to do so, an employee may refuse to monitor, read or respond to contact, or attempted contact from their employer or third parties (relating to their employment) outside of their working hours, and that the section goes on to set out matters to be taken into account in deciding whether the employee’s refusal is reasonable. The proposed clause provides that the employer must not directly or indirectly prevent an employee from exercising their right to disconnect, but this does not prevent an employer from requiring the employee to monitor, or read or respond to contact outside of working hours where: The proposed clause goes on to suggest that contact is permissible where there is an emergency roster change or a recall to work, under that award. As a result, there is some question as to whether it is intended that the employer is prevented from contacting the employee except in certain circumstances, or whether the employer can contact as much as it wants, the right is for the employee to ignore those attempts. The fact that contact is “permissible” in some circumstances suggests that contact is not permissible in others. Of course, this was a draft of an award provision, it is unclear what form the right to disconnect will take in respect of each award. For advice in relating to commercial and business law, including employment, please contact Peter Muller at peterm@qbmlaw.com.au

Queensland Building & Construction Commission – Suspension or Cancellation of Building Licenses

September 11, 2018
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The Queensland Building and Construction Commission are cracking down on licensing requirements for builders, contractors and subcontractors. Under Section 48 of the Queensland Building and Constructions Commission Act 1991 the Commission may suspend or cancel a license for a variety of reasons including where a builder or contractor’s financial circumstances do not satisfy the relevant financial requirements in accordance with the Commission’s policy. If builders or contractors receive a notice to suspend or cancel their licenses from the QBCC they must act quickly. Strict time limits apply to challenge such notices and to apply to have any decision by the QBBC either suspending or cancelling a license reviewed by the Queensland Civil and Administrative Tribunal. If you require assistance you can contact our partner Justin Mathews of our office on (07) 5574 0111 or email justinm@qbmlaw.com.au.

Business Law

Clawback of leasing incentives

Seller forced to pay $1,650,000 commission on failed sale

Employee’s Right to Disconnect

Queensland Building & Construction Commission – Suspension or Cancellation of Building Licenses

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