Franchise Law

INSOLVENT TRADING AND RELATED ENTITIES AS LAST CREDITOR PRIORITY

The recent case of Perrine v Carrello [2017] WASCA 151 demonstrates that flexible payment arrangements between related entities may still be considered debts and that if this debt is incurred while the company is insolvent, it may constitute insolvent trading, rendering directors personally liable for the debt. The Court not only ordered the directors to repay to the company the losses suffered but also said the related entities would not be entitled to any distribution in the liquidation until all other creditors had been paid.

Claiming Privilege: So You Don’t Have To Tell All!

The right to claim ‘Privilege’ provides protection from having to make disclosures, answer questions or provide documents. It can be lost if conduct occurs that is contradictory to the maintenance of the confidentiality of the information over which privilege is claimed.

In today’s business environment, franchise systems and franchisees can potentially face the prospect of regulatory action against them by the Australian Competition and Consumer Commissioner, the Fair Work Ombudsman, the Australian Taxation Office, and where companies are involved, the Australian Securities and Investment Commission. The ability to keep matters confidential and avoid being compelled to provide information, answer questions or make statements can be a critical tool in defending prosecutions that may be commenced.

This article reviews different types of privilege and how this can be used or lost.

Getting It Wrong When Contracting

The Courts are kept busy with cases where the parties have failed to satisfy the basic elements of a contract, leading to unhappy outcomes. This article provides examples where the parties have not got it right and highlights the need for seeking professional assistance whenever there is uncertainty.

FWO Pursues Caltex Franchisee

In 2016, the FWO randomly audited 15 franchisees to ensure compliance with the Fair Work Act. Due to discrepancies discovered during the audit, Aulion Pty Ltd will shortly appear in court in relation to the alleged underpayment of overseas workers and falsification of employment records.