Written by: Alexander Demlakian

Introduction

As a lender in New South Wales, if commercial circumstances present you with the option of securing your interest in real property, and you elect to proceed in obtaining a secured interest in that property, more often than not, you will encounter the scenario where more than one party hold a secured interest in the property.

Walking hand in hand with this scenario, is the question of priority. When multiple parties have a secured interest in real property, and each are asserting a competing interest, who stands first in line to enforce their security?

General Rule

When it comes to Priority, the general rule established by the High Court’s decision in Lapin v Abigail [1930] HCA 6; 44 CLR 166 is that the ‘equitable interest which arose first in time generally holds the priority’ (General Rule).  

As such, if your equitable interest arose (generally being the date that the Agreement which granted your secured interest was entered into and came into effect) before that of a party asserting a competing secured interest, then your interest will generally hold the priority.

Whilst this General Rule holds weight in the determination of priority between competing equitable interests, it can be a common misconception that this general rule is impenetrable and sufficient on its own merits to safeguard from any competing interests.

This is especially the case in New South Wales where lenders under this misconception rely upon the ‘General Rule’ as the sole protection of their equitable interest in lieu of lodging a caveat, or as justification for any extended delay in registering a caveat.

Approach taken by the Court in determination of priority

With reference to recent authorities on the matter, in Australia Capital Financial Management Pty Ltd v Linfield Developments Pty ltd; Guan v Linfield Developments Pty ltd [2017] NSWCA 99 , Ward JA clarified that ‘the task of determining who has better equity, has regard to all of the circumstances and all of the parties conduct rather than simply answering the question of who’s interest arose first’.

What this ultimately means is that every priority dispute before the Court is assessed on a ‘case by case’ basis where the specific circumstances of that case, and each parties’ conduct holds more weight to the question of priority than who’s interest arose first.

If after those considerations the parties’ equitable interests remain viewed as generally equal, only then would the General Rule apply providing priority to the party whose interest arose first.

Circumstances and Conduct

When it comes to the circumstances that the Court takes into account, given that these circumstances differ from case to case, the obvious lack of consistency makes trying to pinpoint what each of these relevant circumstances are and the weight they hold difficult.

Despite the case by case differences, within the authorities there is general criteria of circumstances the Court considers, and a pattern in ‘external factors’ that give weight to the relevance of these circumstances..

These include:

• How a party’s interest was acquired;

• Whether a party’s interest is a genuine equitable interest;

• Whether a party’s interest is its first ranking security;

• The amount of money owed to each party under their interest;

• The extent of a parties interest (if any) which has been satisfied to date contrasted against what remains outstanding and secured; and

• The proportion of a party’s debt that could be paid out if their security is enforced.

External Factors

Reliance

To determine priority when it appears that the party’s equitable interests are generally equal, significant weight is given to reliance. Where one party’s equitable interest was created in circumstances where it is more heavily dependant and reliant upon realising its interest than the other, the Court will view that party on having the ‘better equitable interest’.

For example in LTDC Pty Ltd v Cashflow Finance Australia Pty Ltd [2019] NSWSC 150 (LTDC), Party A acquired its interest in January 2017, notified their interests on the Personal Properties Security Register, but did not lodge a caveat. Party A’s position was that it was their standing business practice to not lodge caveats unless a default occurred.

A default did not occur until 10 months later, and a caveat was subsequently lodged.

Party A also confirmed that the charge over the property was a secondary form of security, and that it had not carried out any property searches when entering the transaction.

Part B’s interest arose 3 months after Party A’s, however Party B:

1. Performed property searches and valuations prior to acquiring it’s interest;
2. Identified the secured creditors that would rank ahead of it in priority and evaluated that there would be sufficient equity in the property to satisfy their debt should a default occur;
3. Had acquired it’s interest with the property being its primary form of security; but
4. Had failed to search the PPSR.

The Court considered the General Rule and applied the relevant authorities and found,  having regard to all of the circumstances:

1. Party A’s conduct had been undertaken deliberately risking it’s interest by electing not to lodge a caveat at the time the underlying security interest was created;
2. Party B’s interest was created on the reliance on the proceeds of the property to satisfy it’s interest – which justified failing to search the PPSR; and
3. Party B had acquired it’s interest reliant upon the searches it conducted and the equity that appeared to be available in the property.

As a result, the Court found that Party B held the better equity in the property, despite its interest arising 3 month after Party A’s.

Plainly, with respect to reliance, what this means, is that where it is clear one party’s equitable interest was created more heavily reliant than the others on satisfaction of the security, that consideration will hold significant weight in the determination of who has the better equity.

Conduct

A party’s conduct before, during, and after its interest arose will also hold significant weight with the Court’s when determining priority.\

Whilst in LTDC this conduct manifested as a result of Party A deliberately electing not to lodge a caveat, in Applications of Bizcap AU Pty Ltd; Applications of Hengyi Zhao; Applications of FundIT Ltd [2024] NSWSC 588 (Zhao) the Court made a determination with reference to a party’s conduct quite differently.

In Zhao three parties disputed priority.

Party A, who was related to the party who provided security to all three, the Court found to hold the earliest arising interest.

Party’s B and C were non bank, financial institutions, who had failed to search the register prior to acquiring their interests.

Notwithstanding Party A’s interest arising earlier, and Party’s B and C being in the business of financial lending would be expected to be aware of the necessity to conduct the relevant searches prior, the Court found that Party A’s interest should be postponed to Party B and C’s interests.

In making this determination the Court, on the facts and circumstances, found that:

1. Party A’s interest was a related party loan, on ‘unreal’ terms;
2. The terms of Party A’s loan lacked proper documentation;
3. There were constant breaches of the terms of the Party A’s loan by the granting party;
4. Despite the breaches Party A deferred seeking repayment for many years – and all whilst ‘being in the unique position of being able to readily assess the granting party’s financial position’ (to which Party’s B and C were not).

Ultimately, the Court found that Party A, being fully aware of the granting party’s financial situation, and amidst constant breaches to the loan, in failing to seek repayment, acted negligently by failing to take any steps to protect its interests despite them being readily available.

Given Party A’s conduct (or failure of), whilst Party B and C’s failures were considered, they were not sufficient to prevent Party A’s conduct from being postponing.

With respect to Conduct, the Court makes it clear that it is not just the failure to lodge a caveat that can place your priority at risk. Failure to take the necessary steps to protect your interest whilst holding the knowledge and ability to do so will hold significant weight in a determination of priority.

How best to minimise the risk of losing your priority

For lenders, disputes arising over competing priority interests in real property is a common issue , but steps can and should be taken to minimise the risk.

Should a dispute over priority reach the Courts, the practices, conduct, and circumstances of each of the parties in dispute will be placed under the microscope, simply relying upon the General Principle is insufficient.

For lenders in New South Wales, lodge a caveat immediately upon the security interest arising, but it is also advised for a lender to:

1. conduct all relevant property and PPSR searches prior to obtaining a charge;
2. conduct valuations of the property and seek details of any indebtedness that may affect the available equity of the property;
3. identify (if possible) the reliance on the available equity of the party of any prior registered interests;
4. take enforcement action as soon as it becomes enlivened; and
5. registering its interests on the PPSR immediately

The process of resolving a priority dispute can be a long and costly one. But if you take the appropriate steps and act promptly to protect your interests, you leave little room for a party to dispute or question your priority ranking.

Written by George Mihailidis

Cyber security issues and fraud are becoming more prominent with electronic settlements and one of the key risks for the national electronic conveyancing system (“NECS”) and property practises. Professional associations and insurers have warned many within the profession (for years) of the increased risk of fraud and the safeguards and professional obligations that are necessary for the management of cyber security.

The issue at hand is foreseeable, but may be difficult to tackle, and  law practices and clients that stumble into fraudulent dealings or issues may be harmed in areas such as economic loss and reputational damage. The following are examples of factors that are leading to increased risks in cyber security and fraud:

1. Changed payment procedures from cheques to EFT (for example, breaches such as misappropriation of funds by someone entrusted with managing them, or simply human error in the input of details);
2. Use of the internet (information breaches such as passwords, identity details, malware, ransomware, distributed denial of service attacks, man-in-the-middle attacks, brute force, credential stuffing etc.); and
3. Use of emails (email breaches such as phishing, social engineering etc. ). [1]

Victoria’s online real estate settlements depend on email and internet platforms, which raises cybersecurity concerns. To interfere with systems like PEXA, hackers may use malware, weak passwords, or denial-of-service attacks. Users may be tricked into divulging credentials or sending settlement money to criminals by phishing and social engineering emails.

ELECTRONIC SETTLEMENTS

The NECS is operated by Property Exchange Australia Limited (“PEXA”) and is used to settle property transactions online. Generally, anything that occurs online comes with a variety of cyber security and fraud risks, especially noting the fact that the same are conducted using either;

1. General or trust accounts linked to PEXA; or
2. Financial institutions subscribed to PEXA.[2]

CYBER SECURITY RISK

One of the most common cyber security threats within the legal industry is email compromise and the same occurs every single day. Scammers or hackers will mimic the parties involved in an electronic settlement transaction such as the conveyancer, solicitor or real estate agent and gain access to information that is confidential. For example, in Sydney, a couple had unknowingly transferred the amount of $970,000.00 to a scammer during what they believed was a routine settlement. [3]

The consequences of such breaches of cyber security cause a harmful impact on all parties involved in the electronic settlement and the same include:

1. Economic loss for the purchaser(s);
2. Data breaches and loss of sensitive personal/financial information;
3. Disruption of settlement processes;
4. Reputational harm to the conveyancers and solicitors.

FRAUDULENT RISK

These consequences repeat with every different type of threat in electronic settlements.

Fraudulent threats also occur almost daily. An example of a fraudulent threat is an insider threat such as employees or individuals who have a privileged access to information and take advantage of that information to commit fraudulent acts in property settlement. Individuals can alter data, grant access to third-parties, or leak or amend confidential information.

SAFETY

PEXA security experts and the Australian Cyber Security Centre (“ACSC”) recommend the following practices to deter such risk of cybersecurity and fraud in electronic settlement:

1. Using secure communication platforms (for example: PEXA key app to safely exchange bank account information);
2. Never trusting unsolicited email instructions for payments (verifying change in payment details through independent channels, telephoning relevant parties rather than using an email);
3. Attention to detail (double-checking email addresses, being cautious with any emails that convey urgency, secrecy or pressure to act immediately);
4. Protecting personal data and accounts (not providing confidential or financial information to unfamiliar or unverified requesters, ensuring email account has a strong username and two-factor authentication to prevent hackers, antivirus software and email spam filters etc.); and
5. Acting quickly if a mistake or breach is suspected (contacting the relevant authority immediately such as the bank to recall, freeze funds or PEXA).[4]

REGULATORY BODIES

There are many regulatory bodies in Australia that focus on the risks of cybersecurity and fraud in electronic settlements such as:

1. Australian Securities and Investments Commission (“ASIC”);
2. Australian Prudential Regulation Authority;
3. Office of the Australian Information Commissioner (“OAIC”); and
4. ACSC.

LEGISLATION

There are two main pieces of legislation that enforce the matters raised in this article:

1. Cyber Security Act 2024 (Cth)[5]; and
2. Criminal Code Act 1995 (Cth)[6].

Both of the acts stated above relate to enforcing the laws concerned with cybercrime and fraud, this includes electronic settlements. Divisions of the Criminal Code Act 1995 (Cth) such as Division 477 and Division 478 deal with serious computer offences and other computer offences.

CONCLUSION

Fraud and cybersecurity breaches in electronic settlements are now common concerns that must be managed appropriately. Property transactions are now much more efficient thanks to the move to online platforms like those run by PEXA, but there are and will always be unavoidable risks.

Data breaches, insider misconduct, email compromise, and financial misdirection show how easily a routine settlement can turn into serious financial and reputational harm.

Severe loss of economic value has long term negative effects. For example, it can cause clients to suffer financially without recourse for their losses.

It is the responsibility of practitioners to:

1. Establish safe and appropriate verification methods;
2. Utilise secure means of transmitting information;
3. Remain up to date in regard to staff education and training.

Vigilance is required when dealing with electronic transfers. It’s important to appropriately assess and forward plan security measures to mitigate risk.  

The dangers of electronic transfers and cyber-enabled fraud in electronic transactions are now highlighted in a substantial and expanding body of publicly accessible data. Both practitioners and clients must be more aware of these risks in order to take the necessary safety measures. If you have any questions or concerns about these types of risks, do not hesitate to reach out to us at JHK Legal.

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1                      ‘Cyber threats are now a key risk for property practices ’, PEXA (Web Page) https://www.pexa.com.au/content-hub/eight-reasons-why-cyber-threats-are-now-a-key-risk-for-property-practices/.

[2]             ‘Electronic settlement of property transactions’, Consumer Affairs Victoria (Web Page) https://www.consumer.vic.gov.au/licensing-and-                    registration/conveyancers/running-your-business/electronic-settlement-of-property-transactions.

 

3                      ‘Safeguarding Your Property Settlement: Awareness and Prevention of Scams’, PEXA  (Web Page) https://www.pexa.com.au/staticly-media/2025/08/Scam-Awareness-White-paper-final-sm-1756101694.pdf.

4                      ‘Safeguarding Your Property Settlement: Awareness and Prevention of Scams’, PEXA  (Web Page) https://www.pexa.com.au/staticly-media/2025/08/Scam-Awareness-             White-paper-final-sm-1756101694.pdf.

[5]                       Cyber Security Act 2024 (Cth)

[6]                       Criminal Code Act 1995 (Cth)

Written by Thomas Kanz

The provision of independent legal advice to parties in a loan transaction is a fundamental safeguard within the Australian legal system. legal advice helps ensure the borrower and guarantor fully comprehend the risks, obligations and consequences associated with the documents they sign. The manner in which advice is provided is regulated heavily by the Legal Profession Uniform Law, which establishes a high standard of care for legal practitioners.

A particularly sensitive scenario arises when a solicitor is obtained to act for both the borrower and a third-party guarantor. A third-party guarantor is a guarantor that is not legally related to the Borrower, typically a guarantor who is not a director of the borrower company. Such circumstances place the solicitor at the intersection of conflicting duties of loyalty and confidentiality, often creating a conflict of interest where potential professional negligence and ethical breaches are significant risks.

The Regulatory Framework: Rule 11 and the Uniform Law

The primary regulatory instrument governing these transactions in Victoria and New South Wales is Rule 11 of the Legal Profession Uniform Legal Practice (Solicitors) Rules 2015.

This rule applies when a solicitor is engaged to provide legal advice to a borrower, or a third-party guarantor, and the lender requires evidence of the advice being given. The objective of Rule 11 is to standardise the advice process and prevent lenders from shifting excessive liability onto solicitors through non-standardised forms or broad warranties. Rule 11 provides standardised forms for each jurisdiction that must be used when giving legal advice.

[1]

LIV Form Title	Regulatory Schedule	Application
Australian Legal Practitioner’s Certificate 1	Schedule 1	Issued to the borrower.
Australian Legal Practitioner’s Certificate 2	Schedule 2	Issued to the third-party guarantor or surety.
Certificate by Translator/Interpreter	Schedule 3	Mandatory where the client has limited English proficiency.
Form of Acknowledgment	Schedule 4	Signed by the client and retained on the solicitor’s file.

Law Society of NSW Form Title	Regulatory Schedule	Application
Declaration by Borrower/Guarantor of a security interest	Schedule 1, 1A or 1B	Issued to the borrower
Declaration by third party Mortgagor, guarantor, surety, or indemnifier	Schedule 2 or 2A	Issued to the third-party guarantor or surety.
Interpreter’s certificate	Schedule 3	Mandatory where an interpreter or translator is present when advice is given; interpreter details must also be recorded on the declaration.
Acknowledgment of Legal Advice	Schedule 4, 4A, 4B or 4C	Signed by the client and retained on the solicitor’s file only — must not be provided to the lender.

The Ethical Dilemma of Dual Representation

The biggest challenge in providing legal advice to both a borrower and third-party guarantor is the inherit conflict of interest risks. Rule 11 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (ASCR) identifies that a solicitor and law practice must avoid conflicts between the duties owed to two or more current clients. When a solicitor represents both the borrower and a third-party guarantor, they are serving two clients with fundamentally conflicting interests.

The borrower’s primary interest is receiving the loan funds, which often requires the guarantee to be executed quickly. Conversely, the guarantor’s interest is to understand and potentially alleviate the risks associated with the guarantee. This may include the risk of losing their family home or other personal assets if the borrower defaults on the loan. This divergence of interest is worsened when the guarantor is a third party, who receives no direct commercial benefit from the loan.

Conflict of Loyalty versus Confidentiality

Practitioner duties include requiring lawyers to act in the best interests of their client and provide strong and unconflicted advice. However, this duty often clashes with the duty of confidentiality owed to other clients under Rule 9 of the ASCR.[2] For example, if a solicitor learns that the borrower is in a precarious financial position or that the intended use of the loan funds is high-risk, they have an obligation to disclose this information to the guarantor.

Yet, they are prohibited from doing so by the confidentiality they owe to the borrower. The Legal Practitioners’ Liability Committee (LPLC) suggests that in many cases, the damage is done before the lawyer even realises a conflict has arisen.[3] Even if both parties provide “informed consent” to the dual representation, the courts have held this to be a very high threshold to meet in practice.[4]

The Impact of Common Law and Equity: Amadio and Garcia

The requirement for independent legal advice is rooted in the equitable doctrines of unconscionable conduct and undue influence. The landmark case of Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 remains the definitive authority on unconscionable dealings in the context of guarantees. In Amadio, the High Court set aside a guarantee provided by elderly parents for their son’s business debts because the bank had unconscientiously exploited the parents’ “special disadvantage”.

The parents in Amadio had limited English and an incomplete understanding of their son’s desperate financial situation. The court held that where one party to a transaction is at a special disadvantage and the other party takes unfair advantage of that position, the transaction may be set aside. For solicitors, Amadio serves as a warning that a solicitor’s certificate that is merely provide but which does not reflect a genuine understanding by the client will not protect the transaction from being overturned.

The Protection of Volunteer Guarantors

The principles in Amadio were further refined in Garcia v National Australia Bank Ltd (1998) 194 CLR 395, which addressed the concept of the “volunteer” guarantor. Mrs. Garcia, a professional woman, signed guarantees for her husband’s business without fully realising they were secured by an “all moneys” mortgage over the family home. The High Court reaffirmed the rule in Yerkey v Jones, stating that it is unconscionable for a lender to enforce a guarantee against a spouse who did not understand the effect of the document and received no benefit from the transaction, unless the lender took steps to ensure the spouse received independent advice.

This “volunteer” status is a key distinction for third-party guarantors who are not directors of the borrower. Because they receive no “substantial benefit” from the loan, unlike a director who may benefit from the company’s increased liquidity, the court views them as inherently more vulnerable to pressure or misunderstanding. The presence of a solicitor’s certificate is often the lender’s only defence against a claim that the guarantor did not act of their own free will.

The above in Context

In this context, a solicitor does not avoid potential liability merely by signing independent legal advice certificates for both the borrower and the guarantor stating that advice was provided. The existence of a certificate is not determinative. A practitioner may still be exposed to challenge where the advice was not in fact independent, where conflicts of interest were not properly managed or avoided, or where the advice given was insufficient to enable the client to properly understand the nature and risks of the transaction.

Solicitors’ certificates operate as supporting evidence only, they are not conclusive proof that independent legal advice was competently given or understood. The risk of inadequate advice and unmanaged conflict is significantly heightened where the same solicitor acts for both the borrower and a third-party guarantor

The LPLC identifies risk mitigation as a key consideration when issuing a solicitor’s certificate, and recommends that practitioners consider, where appropriate, ‘Only acting for one guarantor and not acting for both the guarantor and the borrower’.[5] Providing independent legal advice is a process that requires time and careful documentation. The Legal Practitioners’ Liability Committee recommends a multi-day approach to ensure the advice is thorough and the client’s understanding is verified.[6]

The Three-Day Advice Cycle[7]

Providing independent legal advice is a process that requires time and careful documentation. The Legal Practitioners’ Liability Committee recommends a multi-day approach to ensure the advice is thorough and the client’s understanding is verified.

A typical best-practice process for a solicitor’s certificate involves three distinct stages:

1. Day 1: Document Intake and Initial Review: The solicitor receives the full suite of documents from the lender and conducts a conflict check. They review the terms for unusual features, such as high default interest rates or broad indemnity clauses.

• Day 2: Written Advice: The solicitor prepares and sends a detailed letter of advice to the client, explaining the nature of the loan, the guarantee, and the specific assets at risk.

• Day 3: Face-to-Face Meeting and Execution: The solicitor meets with the client in person to verify their identity and test their understanding of the written advice. This meeting must be conducted without the borrower present to ensure the client is acting of their own free will.

Conclusion: The Path Forward for Practitioners

The provision of independent legal advice to a third-party guarantor is one of the most high-risk activities in legal practice. The intersection of the Legal Profession Uniform Law, the ASCR, and the Banking Code of Practice creates an environment where the solicitor’s role is not just to witness a signature but to act as a protector of the guarantor.

It is clear that lawyer’s dual representation of the borrower and non-director third-party guarantor is a practice that should be avoided. The difference in interests is too great, and the risk of conflicting duties is too high to be safely managed through informed consent alone. By maintaining professional independence, utilising the prescribed LIV forms, and following a rigorous advice process that includes private interviews and detailed records, solicitors can fulfill their ethical obligations while protecting themselves and their clients from the devastating consequences of an improvident guarantee.

 

 

 

References

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447

Garcia v National Australia Bank Ltd (1998) 194 CLR 395

G E Dal Pont, Lawyers’ Professional Responsibility (Thomson Reuters, 7^th ed).

Law Institute of Victoria, ‘Ethics Ruling Number R5026’< https://www.liv.asn.au/ethicsrulingdetail?RulingNum=R5026>.nt-get-caught-in-the-rush>.

Legal Practitioner liability Committee, ‘Solicitor’s certificates for Guarantors: Don’t get caught in the rush’ (Web Page) < https://lplc.com.au/resources/lplc-article/solicitor-loan-certificates-for-guarantors-do

Legal Practitioners Liability Committee, ‘Conflicts in acting for multiple parties’ (Web Page) <https://lplc.com.au/resources/lplc-article/conflicts-in-acting-for-multiple-parties>.

Legal practitioners’ liability Committee, ‘Keeping out of the Line of fire: Managing Conflicts of Interest’

Law Institute of Victoria, ‘Ethics Ruling Number R4605 < https://www.liv.asn.au/ethicsrulingdetail?RulingNum=R4605>.

Legal Profession Uniform Legal Practice (Solicitors) Rules 2015

Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015

Yerkey v Jones (1939) 63 CLR 649

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[1] Legal Profession Uniform Legal Practice (Solicitors) Rules 2015 s 11.3-11.8

[2] ‘A solicitor must not disclose any information which is confidential to a client and acquired by the solicitor       during the client’s engagement to any person who is not—

9.1.1  a solicitor who is a partner, principal, director, or employee of the solicitor’s law practice, or

9.1.2  a barrister or an employee of, or person otherwise engaged by, the solicitor’s law practice or by an associated entity for the purposes of delivering or administering legal services in relation to the client.

[3] Legal Practitioners Liability Committee, ‘Conflicts in acting for multiple parties’ (Web Page) <https://lplc.com.au/resources/lplc-article/conflicts-in-acting-for-multiple-parties> .

[4] Legal practitioners’ liability Committee, ‘Keeping out of the Line of fire: Managing Conflicts of Interest’

[5] Legal Practitioner Liability Committee, ‘Solicitor’s certificates for Guarantors: Don’t get caught in the rush’ (Web Page) < https://lplc.com.au/resources/lplc-article/solicitor-loan-certificates-for-guarantors-dont-get-caught-in-the-rush>.

[6] ibid.

[7] ibid.

Written by Sarah Olley

Guarantees are commonly required in loan transactions where a lender seeks additional comfort beyond the borrower’s balance sheet. They are frequently provided by directors, shareholders, spouses or other individual/corporate entities related to the borrower in some way.

While guarantees could be regarded as routine when entering into loan transactions, the legal landscape surrounding guarantees is complex and the importance of obtaining independent legal advice cannot be overstated. Australian courts have consistently demonstrated that a guarantee that has been provided can give rise to significant legal risk if called upon, particularly if not explained and correctly documented at the onset.

This article covers how guarantees operate in practice, the key risks and considerations involved for both guarantors and lenders, along with the critical role of independent legal advice.

What is a Guarantee?

A guarantee is a promise by one party (the guarantor) to undertake to fulfil the obligations of another party (the borrower) if the borrower defaults. In commercial lending, guarantees are often taken in conjunction with other security such as mortgages or general security deeds, forming part of an overall risk-mitigation strategy.

Most guarantees are drafted broadly in that they typically secure all present and future liabilities of the borrower, including principal, interest (including default interest), fees, indemnities and enforcement costs. Many are expressed to be “continuing guarantees”, meaning they remain in force until expressly released by the lender, even if facilities are amended, extended or refinanced.

Modern finance documents frequently combine a guarantee with an indemnity. This distinction is critical as a guarantee is a secondary obligation that is dependent on the borrower’s liability. An indemnity, by contrast, creates a primary obligation and may be enforceable even where the borrower’s liability is compromised.

Legal Framework

The National Credit Code (NCC), as part of the National Consumer Credit Protection Act 2009 (Cth), governs guarantees in certain consumer credit transactions, provided the guarantor is a natural person or a strata corporation. Certain guarantees are excluded from the scope of the NCC, including guarantees provided by suppliers under tied loan contracts or tied continuing credit contracts. Additionally, guarantees that secure obligations under credit contracts involving corporate borrowers or loans for business purposes are not regulated by the NCC. This distinction is significant as guarantees not regulated by the NCC are not bound by the form, content, and disclosure requirements outlined in the NCC, such as the need for the guarantee to be in writing, signed by the guarantor, and accompanied by prescribed warnings and disclosures (Bendigo and Adelaide Bank Ltd v Brackenridge [2020] SASC 114).

Risks Associated

Guarantors face significant financial risks when providing guarantees as they may be held liable for the full amount of the borrower’s debt if the borrower defaults. This risk is exacerbated when guarantors lack a clear understanding of the terms and implications of the guarantee.

One of the most significant cases is Commercial Bank of Australia Ltd v Amadio [1983] HCA 14. In that case, elderly migrant parents guaranteed their son’s company debts, and the High Court set aside the guarantee on the basis of unconscionable conduct. It was found that the other party exploited the parents’ special disadvantage and limited understanding, failing to ensure the transaction was properly explained.

Another landmark decision is Garcia v National Australia Bank Ltd [1998] HCA 48 where the High Court confirmed that a spouse who guarantees their partner’s business debts may be entitled to relief where they do not understand the transaction, receive no real benefit, and where the lender fails to take reasonable steps to explain the guarantee or ensure independent legal advice is obtained. This principle continues to influence how lenders approach guarantees provided in family or domestic contexts.

Earlier authority such as Yerkey v Jones (1939) 63 CLR 649 laid the foundation for this approach. This case recognised that guarantees given by wives for their husbands’ debts may be set aside where the nature and effect of the transaction was not understood. While later refined in Garcia v National Australia Bank Ltd as above, the underlying concern with informed consent remains central, in which parties such as this require independent legal advice or adequate steps by the lender to ensure understanding.

These cases do not suggest guarantees are inherently unenforceable. Rather, they demonstrate that courts will closely examine the circumstances in which a guarantee is given, particularly where there is a clear imbalance of knowledge, power or benefit.

The Role of Independent Legal Advice

Independent legal advice serves as a safeguard for guarantors, ensuring they understand the legal and practical implications of the guarantee. It also protects lenders by mitigating the risk of claims of unconscionability or undue influence. It ensures the guarantor understands:

• the scope of the guarantee and any indemnity;
• whether liability is capped or unlimited;
• the circumstances in which the lender may enforce;
• that the lender may pursue the guarantor without first enforcing against the borrower; and
• the potential impact on personal assets.

From a lender’s perspective, requiring independent legal advice is a key risk-management mechanism. Courts have repeatedly indicated that where a lender is aware a guarantor is assuming significant obligations for another party’s debt, reasonable steps must be taken to ensure informed consent. A solicitor’s certificate confirming independent legal advice is now standard practice in many transactions and can be decisive in defending later challenges.

Conclusion

Guarantees in loan transactions remain a powerful and widely used tool in Australian banking, however they carry significant risks for guarantors, particularly those who may be in a position of vulnerability or lack financial literacy.

Independent legal advice is central to ensuring guarantors fully understand their obligations and the potential consequences of default, along with the guarantee being entered into with informed consent to remain enforceable. For lenders, it is a critical safeguard to mitigate the risk of claims of unconscionable conduct or undue influence.

Guarantees should never be treated as standard form or “tick-box” documents. Careful drafting, transparent processes and early legal engagement are essential to protecting all parties involved.

Written by: Sherry Mao

Introduction

In an increasingly complex credit environment, the Personal Property Securities Register (PPSR) has become a critical risk-management and enforcement tool for the lenders. This article considers the PPSR from a lender’s perspective, highlighting why proper registration is critical to place the lenders into a better position in the event repayment obligations aren’t met.

What is Personal Property

‘Personal Property’ means all property other than land, buildings, fixtures to land and most government issued licences or rights, which can be grouped into the following four categories:

• Tangible Property: motor vehicles, boats, machinery, equipment and goods.
• Intangible Property: intellectual property (including copyright, patents and designs).
• Financial Property: cash, shares, stocks, private commercial licences and other investment instruments.
• General Property: all present and after acquired property (All-PAAP) classes.

Common types of registrations (All-PAAP & PMSI)

Lenders often use:

• All Present and After-Acquired Property (All-PAAP): Covers all current and future personal property of the debtor, with flexibility to carve out specific assets.
• Purchase Money Security Interest (PMSI): Covers a specific asset where loan funds are used to acquire it, granting “super priority” over prior registrations if perfected correctly.

When must lenders register their security interest?

For security interests granted by corporate entities (Section 588FL of the Corporations Act 2001):

• Register within 20 business days after the security agreement is signed, or
• More than 6 months before the grantor enters insolvency proceedings (e.g., administration or liquidation).

Failure risks the interest vesting in the grantor upon insolvency, rendering it ineffective against the liquidator/administrator (and potentially for up to 6 months after late registration).

The PMSI registration is subject to a stricter timing rule. The timeframe for the registration of such interest required under Section 62 of the Personal Property Securities Act 2009 (Cth) (PPSA) is as follows:

PMSI Property Type	Timeframe for PMSI Registration
Specific asset is part of the grantor’s inventory and is goods*	Before the grantor obtains possession of the asset
Specific asset is part of the grantor’s inventory but not goods*	Before the security interest attaches to the asset
Specific asset is not part of the grantor’s inventory butis goods*	Within 15 business days of the grantor obtaining possession of the asset
Specific asset is not part of the grantor’s inventory and not goods*	Within 15 business days of the security interest attaching to the asset
*“Goods” is defined as tangible personal property under the PPSA.

Generally speaking, the PMSI registration will take first priority even if there are other prior registrations with respect to that particular asset. However if the registration is not made within the required timeframe, it will lose its ‘super priority’.

How should the registration be recorded – ACN or ABN?

The grantor’s details must be recorded in accordance with Schedule 1 of the Personal Property Securities Regulations 2010 which is summarised as follows:

1. Individual – full names and the date of birth as recorded on the identity documents with the following priority order:

1. Information you have about the individual because of the operation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006
2. Current Australian driver’s licence
3. Australian proof of age card
4. Australian passport
5. Australian visa
6. Passport from the country they usually live in
7. Birth certificate.

2. Company – ACN. Where ACN is available, it is mandatory as the registration of the company’s ABN is an unperfected registration (in the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21).

3. Trust with ABN – ABN (in the matter of 0 Love 0 Pty Ltd v Registrar of Personal Property Securities [2021] AATA 397).

4. Trust without ABN – name of the trust. If ABN is subsequently granted, the registration must be amended within 5 business days of being made aware of the defective registration (in the matter of Psyche Holdings Pty Limited [2018] NSWSC 1254).

Key takeaways for the lenders

Correct and timely PPSR registration can determine full debt recovery versus ranking behind other creditors or losing security entirely. Lenders therefore need to maintain accurate records of registrations, amendments, releases, and debtor notices/requests.

Please feel free to reach out to JHK Legal for further information or guidance around PPSR by contact us on 02 8239 9600 or [email protected].

Written by Sarah Alsarrage

2026 has kicked off with one of Australia’s most significant competition law reforms in decades. As of 1 January 2026, a new Mandatory Merger Control Regime has come into effect to prevent anti-competitive acquisitions while allowing transactions that do not raise competition concerns to proceed efficiently.

Mergers and Acquisitions – why the need for a reform?

A merger or acquisition (M&A) is a business transaction whereby companies combine by either merging into a new entity (merger) or where one company buys another (acquisition). Companies may pursue mergers and acquisitions to reduce costs by operating at a larger scale, expand into new markets, gain greater control over their supply chain, and spread risk across different areas of their business.

Certain M&As can affect the level of competition in the market. While many are minimal, there are M&As that can significantly lessen competition in the market, which reduces the number of competitors in the market and changes the way the remaining competitors operate.

M&As are regulated under the Competition and Consumer Act 2010 (Cth) and administered by the Australian Competition and Consumer Commission (ACCC). If the ACCC viewed that the acquisition is likely to substantially lessen competition, and the proposal was not rectified, withdrawn or amended, the ACCC could commence court proceedings to prevent the acquisition or seek injunctions or divestment orders after the fact.

Under the former regime, it was not compulsory for businesses to notify the ACCC of an acquisition beforehand. It was only an option for businesses to seek the ACCC’s views on their acquisition to reduce the risk of facing legal action if and once the ACCC reviewed it.

The Reform

In 2024, the Australian Parliament enacted the Treasury Laws Amendment (Mergers and Acquisitions Reform) Act 2024, introducing significant reforms to Australia’s M&A framework. This restructured the effectiveness of Australia’s current M&A regulations and processes with the aim of improvement.

From 1 January 2026, businesses must:

1. notify the ACCC of any proposed acquisitions that meet prescribed thresholds and obtain approval before completing the acquisition;
2. await approval from the ACCC before completing the acquisition;
3. complete the transaction within 12 months of ACCC approval unless an extension is granted.

This process aims to:

1. streamline Australia’s M&A review system, making it faster, stronger, simpler, targeted and transparent; and
2. enable the ACCC to identify and prevent anti-competitive M&As.

This framework operates as a two phase process.

Phase 1 – Initial Assessment

The first phase in the process is the ACCC reviewing the notified acquisition to determine whether it could substantially lessen competition. This process takes up to 30 business days (although, this can be extended in certain circumstances).

If no competition concerns are identified, the ACCC will approve the acquisition as early as 15 business days after notification.

Phase 1 is intended to provide regulatory certainty for low-risk transactions while allowing the ACCC to focus resources on acquisitions that raise genuine competition concerns.

Phase 2 – Review

In the event the ACCC determine that there are competition issues that require further analysis, phase 2 is initiated by a formal notice to the applicant. This phase involves a deeper review for up to 90 business days and may include the following timeline:

• Day 25 – If the acquisition is not cleared by day 25, the ACCC may issue a formal notice outlining their concerns (concerns may be issued earlier or later).
• Day 50 – Applicants have until day 50 to respond to the notice.
• Day 60 – Applicants have up until day 60 to offer remedies to resolve concerns.
• Day 75 – Applicants have until day 75 to exchange evidence and submissions.

The ACCC will then either approve or refuse the acquisitions with or without conditions. Refusal of approval will occur if the competition concerns outweigh the benefits.

Public Benefit Assessment

In the event the ACCC refuses or imposes conditions that the applicant disagrees with, they may apply for a Public Benefit Assessment. This is an additional review to determine whether the acquisitions broader benefits outweigh the competition detriments. This phase can take up to an additional 50 business days.

Failed determination

In the event the ACCC do not make a determination within the statutory timeline/deadlines (subject to extensions), the acquisition is deemed approved.

The introduction of the mandatory merger control regime marks a major change to how M&As are regulated in Australia. Parties contemplating M&As will need to factor ACCC approval and statutory timeframes at an earlier stage. While the reforms increase potential regulatory oversight, they ultimately aim to create a clearer and more consistent process that protects competition while continuing to support legitimate business transactions.

If you have any questions about M&As or how the regime may affect your transactions, please feel free to reach out to our team at JHK Legal.

Written by Shelby Sommerfeld

In a competitive market, it can be difficult to decide when timing and consideration is ideal to transact and conduct business. Whether purchasing or selling property, shares, assets or inventory, negotiating a merger, or completing a share buy-back – timing is of the essence.  A Put and Call Option Agreement (Option Agreement) can act as a bridge; creating flexibility for the Buyer, while offering comfort to the Seller in maintaining control over the timing and terms of the Agreement. Such Agreements can offer cost control in a fluctuating market, manage uncertainty, and act as a vessel to achieve strategic business objectives which otherwise may have resulted in missed opportunities without the mechanisms an Option Agreement provides for.

What is a Put and Call Option Agreement?

A Put and Call Option Agreement is a contractual agreement between a (potential) Buyer and (potential) Seller that allows the subject matter of the contract, whether that be property or assets, to be purchased at a future date for a predetermined price on predetermined terms and conditions. The future date is determined by the Put and Call Option periods and their relevant expiry dates.  Entering into an Option Agreement does not guarantee the sale of the property or asset but rather guarantees the option to exercise the right to purchase (by way of a call option), or in the instance of the Seller, the option to exercise the right to sell (by way of a put option). For instance, where the subject matter is real property, the contract of sale is only properly formed upon the exercise of either the Put or Call Options under the Option Agreement. The resulting contract must be annexed to the Option Agreement; it is important the formal purchase contract is viewed by both parties and the terms are agreed upon prior to entering into the Option Agreement.

Deferring the formation of the resulting sale contract while nonetheless effectively committing the parties to proceed with the proposed transaction offers strategic advantages to the Buyer and Seller for a range of commercial and taxation-related purposes, including:

• postponing the point at which stamp duty becomes payable on the underlying resulting contract;
• deferring the disposal date of a capital asset so that it falls within a later income year;
• delaying the purchase price payable allowing the parties further time to conduct due diligence and to obtain finance;
• where permitted under the Agreement, providing the Buyer the opportunity to nominate another entity to enter the purchase contract;  thereby facilitating anon-sale of the property to a third party without the need for the Buyer to first enter a formal dutiable contract; or
• allowing a builder to secure land with the intention of selling onto a third party intending to acquire a house-and-land package.

Call Option Period:

The Call Option period comes first in time and during this period the Buyer has the right, but not the obligation, to purchase the property or asset through exercising their Call Option under the agreement.

In return for the Seller granting the option to the Buyer to purchase during a specified period at a predetermined price, the Buyer pays a Call Option Fee which is usually nonrefundable and acts as security to the Seller that in the event the Buyer does not exercise their option, or the option lapses. The option fee essentially reserves the Buyers exclusive right to purchase during the Call Option period. In exchange for the Seller granting the Buyer an exclusive opportunity to purchase during the Call Option period, the call Option Fee paid by the Buyer to the Seller is non-refundable.

Put Option Period:

If the Call Option is not exercised prior to its expiry date it lapses and the Put Option Period begins. At the expiry of the Call Option, the Seller can compel the Buyer to purchase the land or asset which can also be referred to as the Seller putting the option to the Buyer.  If the Buyer has not nominated a third-party Buyer, the Seller becomes the option holder and can compel the Buyer to purchase for the agreed upon price. If the Buyer refuses to it would be deemed a breach under the contract.

Alternatively, if both parties decide not to exercise the option, the Option Agreement lapses and both parties walk away from the proposal, however the Seller still retains the Call Option Fee paid by the Buyer in return for holding the Buyers exclusive opportunity to purchase during the specific period.

Option Agreements in Context:

In the development sphere, Put and Call Option Agreements are commonly used by developers and builders with great success. For instance, a residential developer (Seller or Landowner) may offer several vacant lots to a smaller developer (Buyer) to be purchased at a later stage once planning permits, subdivision and zoning take effect. The Put and Call Option dates can be set to be triggered by certain events such as land registration or council building approval.

This provides flexibility to the Seller in ensuring the lots have a secured sale at a certain date but also allows the Seller time to obtain permits and liaise with surveyors for registration. During this period the Buyer can also conduct their due diligence, undergo crowd funding processes or in circumstances where the Agreement permits, find a third-party buyer to nominate to purchase the land before the Call Option period expires. The third-party buyer could be a builder that has the capability to sell house and land packages, or the initial Buyer that entered the Option Agreement could on-sell the land to a third-party Buyer at a higher price post Option Agreement.

In Queensland this mechanism is particularly useful as Buyers may nominate a third party to exercise the option and purchase the property without attracting adverse stamp duty consequences. However, other states and territories do not take the same approach, and the nomination can be seen as a second dutiable transaction attracting double stamp duty. A Put and Call Option Agreement can be a powerful tool in the hands of a well-informed buyer, however it is important to ensure the Options are exercised correctly, notice of disclosure is provided and each party’s obligations are clearly spelt out under the Agreement.

While Put and Call Options are often used in the context of real estate, the mechanisms can also offer flexibility in other transactions. 

Business Sales, Mergers and Acquisitions:

Option Agreements can provide exit strategies for business owners that wish to sell their business but are unable to do so conventionally as they play a major role in the business’ operation and are seen to be attached to the business’s goodwill. An Option Agreement can incorporate terms that allow the founder to remain working in the business for an agreed period on agreed terms. This exit strategy provides a means for the business owner to sell their business as a profitable business as opposed to the owner closing the business or selling for less value.

Shareholder Agreements and Share Sales:

Such agreements are also beneficial in share sales, where they can provide mechanisms for the orderly transfer of shares and delay tax obligations. The transfer of shares can trigger a CGT event (Capital Gains Tax) and a Put and Call Agreement can offer flexibility when the parties aren’t in the commercial or financial position to transact immediately.

Looking Ahead:

Whether purchasing property but requiring further time to conduct due diligence enquiries, raise funds or obtain relevant building permits; or selling shares and wanting to give key staff the opportunity to buy shares and invest as part of an incentive scheme, an Option Agreement can pave the way to achieve such strategic objectives. While Option Agreements are not an umbrella approach to conducting business, in certain circumstances they can be a useful legal mechanism for the right parties hoping to achieve the desired outcome when the terms are clear, the exercise dates are properly managed, and the Agreement is accurately structured to comply with the relevant legal requirements.

Written By: Craig Reynolds

Previously, practitioners acting in banking and finance transactions did not have any disclosure obligations to the Australian Transaction Reports and Analysis Centre (AUSTRAC). However, post 1 July 2026, these obligations will change.

This is a result of the recent changes to Australia’s anti-money laundering and counter terrorism financing (AML/CTF) regime which represents a significant step towards ensuring Australia is keeping up with and complying with the international standards to combat money laundering and terrorism financing.[1]

The most significant change to the AML/CTF regime in Australia was the introduction of disclosure obligations for professionals such as lawyers, conveyancers, real estate agents, accountants, dealers in precious or high value items and trust and company service providers, otherwise known as the “Tranche 2” entities.

On 29 August 2025 the CEO of ASTRAC tabled the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (Cth) (2025 Rules) providing the new rules Tranche 2 entities will be required to comply with.[2]

The tabling of the 2025 Rules provides the Tranche 2 entities with clarity as to their disclosure obligations to AUSTRAC under the new AML/CTF regime,[3] that they previously did not have.

The 2025 Rules now provide banking and finance lawyers with the opportunity to prepare for the changes to ensure compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act).

A more detailed overview of what a Tranche 2 entity is and what the AML/CTF changes entail can be found via previously published JHK Legal article “Changes to the Anti-Money Laundering and Counter-Terrorism Financing Regime: What Do You Need to Know?”.[4] This article will focus on the specific disclosure obligations the AML/CTF changes entail.

Expanding what services require disclosure

Prior to the changes to the AML/CTF Act the services that required disclosure were transactional in nature and focused on the direct participants of that service, such as banks, credit unions, bullion dealers, casinos, etc.[5] The professional services that enable the provision of a service, such as lawyers, were not captured by the AML/CTF Act.

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) (Amendment Act) changes this and adds various professionals that, come 1 July 2026, will be required to make disclosures to AUSTRAC.[6]

For the purposes of this article, it seems that the service that most practitioners within the banking and finance space will fall under is Table 6 Item 3 – which provides that if a professional receives or holds money as part of completing a transaction then it is likely to be deemed a service that requires disclosure to AUSTRAC.[7]

For completeness it should be noted that before engaging in a designated service a practitioner must complete relevant due diligence procedures as outlined at Part 6 of the 2025 Rules. These due diligence requirements are extensive but are grounded in common sense and best practice. Accordingly, it would not be fanciful to think that diligent practitioners have not already undertaken these steps, as such, this article will not outline these steps.

Information to be disclosed under the 2025 Rules

What information is to be provided to AUSTRAC pursuant to the 2025 Rules changes based on the type of the service being provided and what type of institution the Tranche 2 entity is in the transfer of value scheme.

The types of institutions are an ordering institution, beneficiary institution and intermediary institution (together “Institutions”).[8]

The scope and variety of banking and finance practice and the changes to the AML/CTF regime are vast and banking and finance practitioners are likely to be captured by all of the Institutions.

Defining the Institutions

It would come as no surprise that the changes to the AML/CTF regime have resulted in the definition of the Institutions being created or expanded.[9]

Prior to the 2025 Rules and the Amendment Act,[10] the AML/CTF Act:

• Restricted the definition of an ordering institution and beneficiary institution to an authorised deposit‑taking institution, bank, credit union, building society or an entity specified in rules published by the CEO of ASTRAC (AML/CTF Rules)[11] – currently the 2025 Rules.
• Did not define an intermediary institution.

The changes in the Amendment Act now:

• Designates that an ordering institution and beneficiary institution are to be defined in accordance with the AML/CTF Rules; and[12]
• Defines what an intermediary institution is and otherwise allows for the definition to be in accordance with the AML/CTF Rules.[13]

The new definitions pursuant afforded by the new AML/CTF regime provides that an entity is:

• An ordering institution if:
  • It accepts an instruction for a transfer of value[14]; and
  • It does so in its normal course of business.[15]
• An intermediary institution if:
  • It receives and passes on a transfer message[16] for a transfer of value in a value transfer chain[17]; and
  • It does so in its normal course of business.[18]
• A beneficiary Institution if:
  • It makes the transfer of value available to the payee; and
  • It does so in its normal course of business.^[19]

In addition to the above expanded definitions for ordering institutions and beneficiary institutions, the 2025 Rules also provide examples where an entity would be deemed to be these institutions, but without limiting the definitions.[20]

Disclosure obligations of each of the Institutions

The 2025 Rules provides what information needs to be collected, verified and/or retained and what information needs to be disclosed to AUSTRAC when providing a designated service, the type of information required depends on the circumstances transfer of value scheme. ^[21]

For example, if a practitioner received instructions from their client to distribute funds paid into their trust account into a borrower’s account via electronic funds transfer to a domestic account – under the new AML/CTF regime the practitioner would be encapsulated by all three Institutions and as a result would be required to:

• Collect and verify the payer information
• the payee’s full name.
• Collect the payee’s full name.
• Disclose to AUSTRAC tracing information for the transfer of value.^[22]

Part 8 Division 2 of the 2025 Rules provides informative tables which outlines what is required to be disclosed in various transactions. These tables are extensive and clearly are taking all reasonable steps to ensure that all transfers of value / transactions both domestic and international are canvased.

Indeed, it should come as no surprise that the rabbit hole as to what information is required to be collected does not end at these tables – if we use the above example, further, albeit necessary, clarity is provided Rule 1-4 of the 2025 Rules, including what a payer information and tracing information is, these definitions being:

• Payer information – means the entities full name and any one or more of the following:
  • Unique customer identification number given by the ordering institution[23];
  • Unique identifier for the payer[24];
  • If an individual – the date, residential address and place of birth of the payer; and/or
  • If a company, sole trader or business – the full business address.

Note – the address must not be a PO Box.

• Tracing information – this definition is extensive however, it can be reasonably be condensed to all information utilised by the payer to complete the transaction

Onward to July 2026

It would be disingenuous to say that the new AML/CTF regime does not at first blush appear overwhelming and have the feeling that such steps are likely to result in additional costs to practitioners and by extension their clients.

However, upon review, this regime is simply codifying what would already be considered best practice for banking and finance transaction with the addition of some disclosures being required to be made to AUSTRAC to ensure compliance.

Looking at these changes in this light, one could see these as an opportunity to ensure that you are adhering to best practice procedures for banking and finance transactions to ensure crimes such as money laundering and/or terrorism are not perpetuated.

The clock is ticking as to these changes coming into effect. It seems more pragmatic for practitioners to take it as an opportunity to update and review their current procedures to avoid contravening the new regime especially if they are not already engaging in best practice when it comes to banking and finance transactions.  

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[1] Commonwealth, Parliamentary Debates, House of Representatives, 11 September 2024, 6467 (Mark Dreyfus, Attorney-General) (‘Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024’).

[2] The power conferred by the CEO of AUSTRAC to make these rules is detailed in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) s 229.

[3] Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) Sch 8 Pt 4 s 11(1)

[4] Sarah Jones, ‘Changes to Anti-Money Laundering and Counter Terrorism Financing Regime – What do you Need to Know?’, JHK Legal Australia Pty Ltd (Article, 28 April 2025) https://www.jhklegal.com.au/changes-to-anti-money-laundering-and-counter-terrorism-financing-regime-what-do-you-need-to-know/.

[5] Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) s 6

[6] Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) Sch 3 Pt 3 s10 and Sch 3 Pt 4 s 11

[7] Ibid Sch 3 Pt 3 s10

[8] Ibid Div 2 and Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) Sch 8 Pt 1 s 63A

[9] Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (Cth) r 8-1 and 8-2.

[10] Ibid and Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) Sch 8 Pt 1 s 63A (1)

[11] Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) s 8 (1) (c) ), s 9 (1) (d) and s 229

[12] Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) Sch 8 Pt 1 s 63A (1) and (5)

[13] Ibid 63A (9)

[14] A transfer of value relates to the transfer of money, virtual assets or property – but does not include physical money or tangible property or as otherwise specified in the 2025 Rules or such other rules published by the CEO of AUSTRAC – see Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) Sch 8 Pt 1 s 14

[15] Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (Cth) r 8-1 (2)

[16] A transfer message is effectively the information that the payer has provided for the transfer of value to be made – see Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) Sch 8 Pt 1 s 14

[17]  A value transfer chain is each of the Institutions where applicable in a transaction – see Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) Sch 8 Pt 1 s 63A (11)

[18] Ibid Sch 8 Pt 1 s 63A (9)

[19] Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (Cth) r 8-2 (2)

[20] Ibid r 8-1 (3) and r 8-2 (3)

[21] Ibid r 8-3, r 8-4 and 8-5

[22] Ibid r 8-3 item 2, 8-4 item 2 and 8-5 item 2

[23] As noted above, when completing a designated service, various due diligence procedures are to be undertaken, this includes a verification of identity. Accordingly, an ordering institution acting for the payee ought only to have this unique number if it has completed its due diligence including completing a verification of identity.

[24] This is a number other than a tax file number provided by an Australian government body (excluding a tax file number) or other foreign countries or other approved societies or foundations – Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (Cth) r 1-4

Written by: Sarah Jones

What is a caveat?

(a) A caveat is a notice of a charge or interest in real property (i.e. land) which is registered on the title of that property. It’s literal translation from Latin is “let him beware”. It says to other people: “I have an interest in this property, so do not do anything with it without letting me know”.

(b) There is some argument over whether a caveat (or a caveatable interest) is a “security interest”. For the purposes of a caveator who has a charging clause in a guarantee document signed by an owner of the property resulting in the caveat, the better view is that the charge underlying the caveat is a security interest. For other types of caveats, this may not apply.

When can someone lodge a caveat?

There are a number of instances which can allow for the registration of a caveat. The main examples are:

1. Security interest by way of a charge (for example: a charging clause contained in a guarantee and indemnity);
2. Security interest some other way. A common reason for this is an unregistered mortgage;
3. Interest as a purchaser under an agreement of sale;
4. Bankruptcy trustee of one or all of the registered proprietors;
5. Implied, resulting or constructive trusts.
6. Note that a caveat may only be lodged if the caveator has a genuine claim to a legal or equitable interest in the property.[1]
   
   
   [1] Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140.

Caveats and mortgages

Generally, a mortgage is an objectively better security than a caveat. A mortgage is a legal interest in the property whereas a caveat is a notice of a charge in property. A mortgage includes a host of specific security clauses and rights on default where a caveat does not.

Some further differences are:

(a) A mortgage requires the consent of the mortgagor (being the owner of the property) by way of execution (leaving aside powers of attorney). A caveat does not.

(b) A mortgagee can appoint an agent as mortgagee in possession or a receiver to sell the property if there’s been a default (having complied with various laws and requirements). A caveator must obtain a court order for the sale of a property and any party on title (including other caveators) have a broad opportunity to defend or dispute the proceedings.

(c) A mortgage must be discharged by the mortgagee except in the most extreme circumstances. A caveat can be lapsed by an interested party.

(d) Importantly, a caveat stops any further mortgages being lodged. Neither a caveat nor a mortgage can stop any further caveats being lodged

Priority disputes

The general rule as to the priority pay out from the sale of a property is that the flow of funds follows these priority rules:

First: local, state and commonwealth payments (rates, land tax, etc owing on the property);

Second: first mortgagee;

Third: first mortgagee’s solicitor’s fees;

Fourth: any further mortgagees;

Fifth: any further mortgagees’ fees;

Sixth: first caveat;

Caveat priorities are determined by the first equitable interest in time (not the first registered) generally prevailing unless the earlier interest holder’s conduct has contributed to the later interest being acquired in ignorance of the earlier one.[1] Further commentary is set out at 4(b) below;

Seventh: further caveats following the same priority principle;

Note in respect of the caveats that if there is not enough equity, they can either share the equity on a pro rata basis or challenge that the whole sum is due to one owing to a clear priority. Sometimes a property will sell and funds will flow to a trust account or court to allow for this dispute to continue without delay to the innocent third party purchaser;

Eighth: registered proprietors.

Even though the priority rules are reasonably well established, they can be thrown out by what is known as “postponing conduct”.[2] A recent case for this position is LTDC Pty Ltd v Cashflow Finance Australia Pty Ltd[3] in the Supreme Court of NSW. In that case, the caveator had a charging clause from some years ago, and an incoming lender/secured party (LTDC) acquired its interest in the relevant property after the caveator. However, LTDC funded (and lodged a caveat) based on a certain equity position in the property in question, and the loan was specifically tied to the property. The caveator later lodged its caveat (a secondary security for an invoice finance facility). It was held that the caveator’s failure to lodge its caveat earlier in circumstances where LTDC then suffered a loss displaced the “first in time” rule, so even though the caveator’s charge was earlier, LTDC was held to have first priority.

Caveats and sales

(a) If a registered proprietor or mortgagee in possession is selling a property, they need to account to all secured parties.

(b) However, if there is not enough equity to pay out a caveator, the caveator must withdraw its caveat – it cannot keep its caveat on when there is no equity to pay it. This is because a caveat is a notice of an interest in the equity of the property; if there is no equity, there is no interest. The circumstances that a caveator should check in respect of this are:

• That the purchaser is an independent third party;

• The sale price appears appropriate for the market; and

• The settlement statement shows no funds flowing to the registered proprietor.

Lapsing notices

In most states, if you have a caveat, you can be served with a lapsing notice by an interested party or a registered proprietor.

A lapsing notice cannot be withdrawn. Once a lapsing notice has been issued, the time limit to respond begins and if a caveator seeks to maintain its caveat, it must lodge proceedings in the Supreme Court of the relevant jurisdiction (ie: the state of the relevant property). The initial step is to get an immediate interlocutory hearing to maintain the status quo until the matter can be heard properly. For example, in NSW a caveator has 21 days to bring proceedings and be heard[1] but must also follow the NSW Supreme Court’s rule to file that application at least 5 business days prior to the 21 days elapsing.

The result of this is that even if the lapsing notice was issued in error or ought not have been issued legally, a caveator must go to the initial expense of a Supreme Court hearing to maintain their caveat where one is issued. Of course, a costs order might be obtained during or at the end of the matter, but at the outset, the cost will be borne by the caveator.  

Specific State Rules

(a) It is worth being mindful of the fact that in Queensland[2] and the Northern Territory,[3] caveats (for the most part) lapse after three months unless you bring proceedings in a court of competent jurisdiction to maintain them and file a notice with the land registry confirming this has been done.

(b) A court of competent jurisdiction is a higher court – so it must be a District Court or Supreme Court proceeding.  

(c) Further, even though a caveat may have lapsed, the titles office rarely remove the caveats without a direct application from the caveator or an interested party. Therefore, a title may include caveats which have long since lapsed. It is worth reviewing the title closely where you are the registered proprietor or another caveator in a potential priority dispute to consider whether any of the caveats can be removed immediately without further argument.

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[1] Section 74J Real Property Act 1900 (NSW).

[2] Section 126 of the Land Title Act 1994 (QLD).

[3] Section 142 of the Land Title Act 2000 (NT).

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[1] Double Bay Newspapers Pty Ltd v AW Holdings Pty Ltd (1996) 42 NSWLR 409; J&H Just (Holdings) Pty Ltd v Bank of New South Wales [1971] HCA 57.

[2] Double Bay Newspapers Pty Ltd v AW Holdings Pty Ltd (1996) 42 NSWLR 409.

[3] [2019] NSWSC 150.

Written by Sarah Alsarrage

On 14 December 2023, the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 came into effect, amending the Fair Work Act 2009. A key focus of the reforms is labour hire, with new “same job, same pay” provisions now under the jurisdiction of the Fair Work Commission (FWC). 

Understanding labour hire 

Labour hire, sometimes referred to as on-hire or agency work, involves a business engaging a provider to supply workers rather than hiring them directly. 

For example, a food packaging company experiencing high but seasonal demand may engage an agency to supply extra workers during that period. This is not to get confused with an employee and employer relationship. The agency is responsible for employing and paying those workers, while the host company directs their day-to-day duties and pays the agency for the service.  

 This three-way relationship allows businesses flexibility in managing workload, while the agency carries the employment obligations such as payroll, superannuation and tax. 

Key changes under Closing Loopholes 

Before the new legislation, labour hire workers could be paid less than directly employed staff at the same workplace, even when performing the same tasks. This raised some concerns over fairness in the workplace.  

The Closing Loopholes Act addresses this by introducing Regulated Labour Hire Arrangement Orders, commonly referred to as “same job, same pay” orders. These ensure labour hire employees receive at least the same pay as directly employed workers performing equivalent duties at the host business. 

Applications for these orders can be made to the FWC by employees, unions or host businesses. The FWC must make an order where: 

1. A business is supplying, or will supply, employees to a host; 

2. The host is not a small business employer; and 

3. The host’s industrial instrument (award or enterprise agreement) would have applied if the workers were directly employed. 

The FWC is not required to make an order if the arrangement is primarily for the provision of a service (rather than labour), or if an order would not be fair and reasonable in the circumstances. 

What this means going forward 

The reforms mark a significant step towards greater fairness in Australia’s labour market. By embedding the principle of “same job, same pay” into workplace law, the Act reduces wage disparities and strengthens protections for labour hire workers. 

For businesses, this means reviewing current labour hire arrangements to ensure compliance with the new requirements. By doing so, hosts and providers can foster more equitable, transparent and sustainable working relationships that support both operational flexibility and employee rights.