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Many prospective employees are given employment contracts which contain restraints against competition with their employer. Given that these are given at the outset of the employment relationship, the employee might not be thinking about what would potentially happen at its end, and not pay a great deal of attention to the restraints. This however can lead to issues at the ending of the employment. Restraints against competition from employees are only valid to the extent to which they are reasonably necessary to protect the legitimate interests of the employer, assessed as at the time that the restraints were agreed to, but potentially having regard to planned expansion. Usually, this will involve protecting business intellectual property, and preserving the client relationship, for example restricting the employee from taking instructions from a client of the business with whom the employee dealt for a sufficient time to allow a replacement employee to form a relationship with the client. Many restraint clauses however go much further than what is reasonably necessary. It is not uncommon for clauses to provide that the employee cannot work in that industry for a period of months to years, even if it is their profession. The clauses then set out different periods of restraint and different areas, with the intention that if one combination fails as it is excessive, then a lesser one might be valid.  Sometimes there will be dozens of potential combinations of time, area, and capacity.  There is also legislation in New South Wales allowing the courts to impose a lesser restraint. The problem with this for employees is that they will not be sure what is or isnt valid until they are tested in court, at a cost of tens of thousands of dollars (money that the employer can afford but the employee might not) and potentially months or years of stress and risk. Unfortunately, the unfair contracts legislation does not apply to employment contracts.  It is possible that if it did, the restraints in many employment contracts would be taken to be grossly excessive and unfair.  There is also nothing in the Fair Work Act to protect the employees against this situation, whether or not deliberately done by the employer. As a result it is critical that any restraints in employment contracts are considered before they are signed, and that nothing is agreed to beyond what is reasonable. For advice on restraints in employment, please contact Peter Muller at peterm@qbmlaw.com.au

Following on from our article regarding mutual wills https://qbmlawyers.demo2.website/estate-lawyers-gold-coast/estate-lawyers-gold-coast-mutual-wills/, the Queensland Supreme Court has recently considered whether Mutual Wills had come into existence without any express statement in the Will that they were mutual.  Relevantly, this was a matter in which a husband and wife had made “mirror wills” (ie giving their estate to each other, and then giving their estates to the same beneficiaries if they both passed).  A few years after the wills were made, the husband made another will under which, if his wife passed, he gave more of his estate to his relatives than to the relatives of the wife.  The husband died a few years after the wife passed, at which time the relatives of the wife (or at least one of them) was unhappy at the change of the will which resulted in the relatives of the wife receiving less of the estate.  He brought an action claiming that the wills were mutual wills and that the husband could not change his will without the consent of the wife, and that once she lost capacity the wills could not be changed at all.  The action failed.  His Honour Justice Kelly in the Queensland Supreme Court made the following observations about previous decisions concerning Mutual Wills: The starting point is that a Will is revokable and may be revoked by making a later will. At the heart of the doctrine of Mutual Wills is the existence of a formal, legally binding agreement, often between husband and wife, not to revoke the effect of the two wills which are made together and essentially on the same terms; What is needed to establish Mutual Wills is proof that the parties made an agreement to execute their wills in reciprocal terms and – expressly or by implication – they contracted not to revoke (change) those wills; Mutual Wills arise when two people agree to make wills in particular terms and agree that those Wills are irrevocable and that they will remain unaltered; Substantially similar or even identical wills are not Mutual Wills unless there is an agreement that they will not be revoked; Making Wills simultaneously and with similar terms is not enough to establish an agreement not to revoke them; Even though a will (and even a Mutual Will) is revocable, if there is a Mutual Will, then an action arises to make the survivor behave in accordance with the Mutual Will; A common reality is that a married couple might make informal agreements about their wills which are not intended to be legally binding.  The couple might trust each other in point of honour to deal fairly and reasonably in light of the circumstances as they might arise during the survivor’s lifetime; Perhaps most husbands and wives make wills by agreement but they do not bind themselves not to revoke their wills and do not intend to undertake or impose any kind of binding nomination. On the facts that were under consideration, there was not sufficient evidence of an agreement to the effect of a Mutual Will.  As we have discussed in our article on Mutual Wills, a lawyer should be extremely cautious about taking instructions to act on behalf of a couple in making Mutual Wills.  The will – in essence – could result in the surviving spouse being unable to effectively make a new will for decades, in circumstances which are changing.  As an example, the Mutual Will might give assets to beneficiaries who later turn on the survivor and make their life a misery but the survivor will have no ability to remove them from their entitlement to benefit.  There could be other circumstances that change such as a remarriage, a beneficiary becoming bankrupt (as a result of which the trustee in bankruptcy could receive the inheritance, a charity being dissolved or any other number of situations which would ordinarily result in an updating to wills.  If it is good practice to review and update wills every three to five years, then it cannot be good practice to have a will which could bind someone for 30 years or longer. For enquiries regarding mirror or mutual wills, please contact Peter Muller at peterm@qbmlaw.com.au or Jessica Murray jessicam@qbmlaw.com.au

A recent Supreme Court decision considered the costs of a dispute between adjoining owners as to the conditions under which the property A owner could enter into the property B owner’s land of the other to carry out work to property A. The entitlement to do so is triggered by section 180 of the Queensland Property Law Act, and is called the “statutory right of user”. It might be for a permanent easement going through property B to benefit property A (say for access or services), or for a temporary right to enter property B, in this case to install scaffolding along the common boundary. Requests of this nature are concerning for the owner of property B, there are liability issues to consider, and also any permanent impairment on the value of property B or the ability to use it. Section 180 has preconditions to the making of orders which are quite rigorous, and a wide discretion for the kinds of orders that can be made, including for compensation. The decision can be found here and provides a good summary of the effect of the section and costs considerations https://www.sclqld.org.au/caselaw/QSC/2022/160 The section itself is here: http://classic.austlii.edu.au/au/legis/qld/consol_act/pla1974179/s180.html

In most discretionary or family trusts, there are three main roles.  The first is of the trustee, who holds the property and carries on the business for the benefit of the trust.  The second is the identity of the primary beneficiaries.  Usually, the beneficiaries will be in some way related or associated with the primary beneficiaries, and it is usually to the primary beneficiaries that the income of the trust will be allocated if it is not distributed by the end of the financial year, and it is usually to the primary beneficiaries that the capital of the trust will be returned when the trust is wound up.  The third role is that of “Appointor”, sometimes called “Principal” or “Nominator”.  The power of the Appointor is one which allows them to dismiss the trustee and appoint a new trustee in their place, or to fill the role of trustee if it is otherwise vacated (as an example, by the death of the Trustee), without having to make an application to court. As a result, the position of Appointor is a very important one, as in an extreme case the Appointor can dismiss a Trustee who they are for some reason unhappy with and appoint themselves or a more compliant person or company to be trustee in their place.  It is therefore critical that if the Appointor ceases to have that role, the trust deed provides for a suitable replacement process. Many trust deeds provide for the power of appointment to be vacated in the event that the Appointor is bankrupted or dies.  The power of appointment is not a property right and will not normally go to a trustee in bankruptcy if the Appointor is bankrupted.  Despite that, some commonly used trust deeds provide that on a person becoming bankrupt, the power of appointment vests in their “legal personal representative”.  Unless otherwise defined in the trust deed itself, the expression “legal personal representative” is one that is only relevant to superannuation law (and in that context means the executor of the persons last Will).  As discretionary trusts are not governed by superannuation legislation, it is arguable that the “legal personal representative” of the Appointor is actually their trustee in bankruptcy, literally the last person that the parties to the trust would want to hold the power of appointment in respect of the trust.  It is accordingly important to check the power of appointment in trust deeds to ensure that not only does it reflect what you want, but also the succession (replacement) provisions reflect a sensible outcome.  This should be done frequently, and also as part of estate planning processes. For enquiries regarding trusts and estate planning, please contact Peter Muller at peterm@qbmlaw.com.au or Jessica Murray jessicam@qbmlaw.com.au