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22 August 2014

Mentor

Question 1

We currently act for the wife, who as a result of a Family Court Order will have the ownership of the matrimonial home transferred solely into her name subject to the existing mortgage. The husband has refused to sign the Transfer of Land. We have sent the Transfer of Land to have the Registrar of the Court sign accordingly. The property is now on the market and when sold the outgoing mortgagee will require a Discharge Authority to be signed by both mortgagors. In light of the husband not co-operating or having legal representation, can the Registrar of the Court also sign the Discharge Authority?

Answer

The requirement of a signed Discharge Authority is a sensible one, but still within the lender's discretion. Explaining the situation and providing a copy of the court order should be sufficient to persuade the lender to dispense with the signed Authority. Alternatively an attempt to have the Registrar sign an Authority at the same time as signing the Transfer could be made. Failing that, a further application to the Court may be necessary.

Question 2

Dear Mentor, We act for the two vendor parties in a sale of business by shares to the eventual purchaser. The sale of this business is occurring in two steps; the first agreement sells the remaining shares to the majority shareholder and the second agreement sells 100% of shares now owned by a the majority shareholder to the business purchaser. We have drawn up have ready to execute these two agreements however we are unsure whether going concern provisions apply due to the fact that we believe this to be a sale of shares which are a financial supply and are thus not exempt from going concern provisions. Furthermore, for a sale of business by shares, is it common to include the standard vendor warranty provisions (such as financial statements, business records, taxation etc) found in the LIV standard sale of business contract? We do not feel that these are necessary. (Victorian)

Answer

You are correct to identify this transaction as a sale of shares. Therefore it IS NOT a sale of a business. The company may conduct a business, but the business is NOT being sold.
The sale of shares is a financial supply and therefore NOT subject to GST (i.e. the going concern exemption is irrelevant as GST does NOT apply, irrespective of a going concern).
The parties are free to include as much, or as little, information in the sale contract as is agreed. One matter to consider is, if the company is a tenant, will the change in share ownership constitute an assignment requiring landlord’s consent? Consult the lease.

Question 3

Our client purchased shortly after auction 2 blocks of land. The agent had the contracts signed and exchanged over the weekend and she then brought the signed contracts into us. When we looked over the contracts, we noticed the purchase price was plus GST. Our client was not aware of this. At no point did the agent advise this or was this noted on any of the advertising material that was displayed at the auction, nor mentioned at the auction itself. The purchase is for blocks of land that is a mortgagee sale. The current vendor is registered for GST purposes and the mortgagee has confirmed that GST is required to be paid, which our client does not want to do. (Victorian)

Answer

Presuming that ‘plus GST’ was included in the box, on the facts as recited there is very little prospect that your client can avoid the payment of GST. There is no positive misrepresentation and there does not appear to be a misrepresentation by silence. Your client should consider registering for GST if the purchase is in any way associated with a proposed profit making venture, or nominating a GST registered entity.

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