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Vol 20, No 2 December 2012

Wishing you all a Merry Christmasand a Happy New Year

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The Publication for Credit and Financial Professionals I N A U S T R A L I A

CREDIT MANAGEMENT IN AUSTRALIA • December 2012

VOLUME 20, NUMBER 2 – December 2012

Presidents Report 2

2012 AICM National Conference 3

2012 YCPA 10

Credit ManagementWhat is Debtor Harassment Anyway? 13Guidance from the Federal Court of Australia.By Karl Hill

Veda’s quarterly Business Credit Demand Index: 14Growth in business credit enquiries picks up after RBA cutsMoses Samaha.

Fire Prevention 16By Simon Chown

Payment times are down five days since the height of the GFC 17but a post-Christmas spike is expectedD&B

Case study: Ultimately it’s always about proving your debt 18By Peter Ryan

Using PPSR to defend unfair preference claims 20By Ben Sewell

You snooze, you may lose – Why PPSA registration deadlines matter 22By Daniel Turk and Loren Smith

NSW Division: …and the winner is! QLD Division: Claire Williamson of AccountAbility presenting November CNN.

29 31

CONTENTS

Moses Samaha

Karl Hill

14

13

Peter Ryan

Simon Chown

16

Ben Sewell

20

18

EDITOR/PUBLISHERTerry Collins

Email: [email protected]

CONTRIBUTING EDITORSNSW

Murray Ashford QLDGail Watt SA

Christine Ashworth WADonna Smith VIC/TAS

ADVERTISING MANAGERTony Paul

Association MediaTel: (02) 9460 7955

Fax: (02) 9460 8632Email:

[email protected]

EDITING & PRODUCTIONAnthea Vandertouw

Ferncliff ProductionsTel: 0408 290 440


PRINTINGJohn Fisher Printing114-118 Victoria Rd

Marrickville NSW 2204Ph: 9516 1588

THE EDITOR reserves the right to alter or omit any article or advertisement

submitted and requires idemnity from the advertisers and contributors against

damages or liabilities that may arise from material published. CREDIT MANAGEMENT

IN AUSTRALIA is published by the Australian Institute of Credit Management, Level 1, 619 Pacific Highway, St Leonards NSW 2065. The

views expressed in CREDIT MANAGEMENT IN AUSTRALIA are not necessarily those of

Australian Institute of Credit Management, which does not expect or invite any person

to act or rely on any statement, opinion or advice contained herein (whether in the

form of an advertisement or editorial) and neither the Institute or any of its employees, agents or contributors shall be liable for any

opinion contained herein. © The Australian Institute of Credit Management, 2012.

FEATURES

March 2013Software and Technology

May 2013Legal Recoveries

Debt CollectingOutsourcing

EDITORIAL CONTRIBUTIONS SHOULD BE SENT TO:

The Editor, Level 1,619 Pacific Highway

St Leonards NSW 2065or Email: [email protected]

December 2012 • CREDIT MANAGEMENT IN AUSTRALIA

Consumer CreditCredit revolution close to crunch time 24Veda Pilot Spotlights the Impact of Comprehensive Credit Reporting

LegalAn unsecured debt owed to the Commissioner of Taxation 26usurps a prior registered mortgage in the event of Bankruptcy – A recent decision in the Federal court of Appeal.By Michael Stretton and Paul Rojas

Credit Network Website 28

Around the StatesNew South Wales 29Queensland 31South Australia 33Victoria/Tasmania 36Western Australia/Northern Territory 38New Members 40

SA Division: Sam Turtle and Jessica McDonnell. VIC/TAS Division: Greg Kouwiloyan (Accountability), Carole McTavish (Orica), Charles Tims (AICM VIC/TAS).

33 36

Michael Stretton

Neridah Caesar

24

Paul Rojas

26

26

DIRECTORS

Australian President Frank Vredenbregt MICM CCE

Australian VP FinanceG.L. Morris MICM CCE

Professional DevelopmentE.R. Verge MICM

YCPA & CCER. Freier MICM CCE

Law & RegulationJ. A. Neate MICM

Member ServicesJ.G. Hurst FICM CCE

CHIEF EXECUTIVE OFFICERT.J. CollinsLevel 1, 619 Pacific HighwaySt Leonards NSW 2065Tel: (02) 9906 4563Fax: (02) 9906 5686Email: [email protected]

EXECUTIVE OFFICES

Queensland DivisionToni SawyerExecutive OfficerPO Box 1169North Lakes QLD 4509Tel: (07) 3482 2111Fax: (07) 3482 4119Email: [email protected]

NSW DivisionDeborah MannersLevel 1619 Pacific HighwaySt Leonards NSW 2065Tel: (02) 9906 4563Fax: (02) 9906 5686Email: [email protected]

VIC & TAS DivisionPeter KerlinPO Box 131Wendouree VIC 3355Ph: 0417 717 015Fax: (03) 9303 8911Email: [email protected]

SA DivisionKerry HammillPO Box 2131Felixstow SA 5070Tel: (08) 8365 9021Fax: (08) 8365 9021Email: [email protected]

WA DivisionRon AdamsPO Box 8463Perth Business Centre WA 6849Tel: (08) 9427 0816Fax: (08) 9427 0817Email: [email protected]

Association Mediafor advertising opportunities in

Credit Management in Australia

CALL Tony PaulPhone: 02 9460 7955 Fax: 02 9460 8632


2 CREDIT MANAGEMENT IN AUSTRALIA • December 2012

aicmf rom the p res iden t

Frank VredenbregtMICM, CCEAustralian President

As another year draws to the end it is time to reflect on the year past and plan for the year ahead. This will be my last President’s Report as I have made the decision to stand down. This decision was a hard one to make and was not

taken lightly, but was necessary due to other commitments. I need to give special thanks to my fellow directors who have helped me guide the Institute during my term as President: Neil Rickets, South Australia; Steve Thomas, WA; Colin Prosser, Vic/Tas; Ron Freier, Qld,: Grant Morris, NSW; Jeff Hurst, Vic/Tas; James Neate, SA; Evan Verge, WA. These people and their predecessors make the Institute the success that it is, donating their time and effort, and getting nothing back but the thought of giving a bit back to the industry that has given them so much, and a feeling of a job well done. Also my thanks go to Terry Collins, our hardworking CEO for his advice and counsel. And last but not least, you, the members of the AICM for your support. But enough of the maudlin thoughts – The AICM is a vibrant organization, with a growing membership base from where we will find our future leaders, and a great future to look forward to. And the Silly Season approaches and it’s Party Time!

Our recent National Conference on the Gold Coast was another outstanding success. The trade exhibitors put on a terrific display of the latest in systems and tools that will make our jobs easier, and Terry Collins and his crew did a fantastic job of putting together a solid programme of speakers that both entertained us and educated us in new trends, processes and legislative requirements. Our thanks must also go to Veda Applied Intelligence who continued a tradition of several years by being our premium sponsor. I must not forget to thank the speakers (who are too numerous to name) for their time and effort in preparing and presenting top level papers. As they have done since its inception, Dun & Bradstreet again sponsored the Young Credit Professional of the Year Award. The calibre of the young people in our profession never ceases to amaze me. The finalists this year were:

z Qld: Hamish McIntosh, Bank of Queensland z NSW: Bassam Sleiman, Publicis Group z Vic/Tas: Alison Said, Pacific Brands z SA: Nick Pontikinas, Boart Longyear z WA: Kristy Shrigley, Ampac Debt Recovery

Candidates are judged on several categories including professionalism, industry knowledge, self improvement, confidence and work achievements. In my eyes they are all winners, such was the calibre of them all, and they all have a bright future in Credit. However, we needed to pick one who “had the edge”. This year’s Young Credit Professional of the Year is Nick Pontikinas from South Australia. Congratulations Nick.

The year ahead will be one of excitement and challenges for the Institute. New legislation is again on the horizon and the AICM will be doing what it can to ensure all our members will be fully conversant with requirements. We have a growing membership, are financially sound, and will continue to represent the views of the members to government. I leave the AICM in the very capable hands of the current Board and look forward to following the future success of the Institute from the sidelines.

As I said earlier, the Silly Season approaches and its party time. Regardless of your creed and if you are religious or not, it is a time for wishing peace and prosperity on your fellow man. Keep safe and enjoy the festivities. On behalf of the Board of the AICM, and personally, I would like to wish all members and their families a Very Merry Christmas and a Prosperous New Year. Keep safe and well, and I hope to catch up with everyone at future AICM events.

December 2012 • CREDIT MANAGEMENT IN AUSTRALIA 3

AICM Australian President Frank Vredenbregt presenting the President’s trophy to James Neat, AICM Director from South Australia.

Nerida Caesar Veda CEO; opening address at the AICM Conference.

2012

National Conference

The 2012 AICM National Conference, was held at the Marriott Resort, Surfers Paradise on 10 – 12 October 2012.

Attendances topped the 400 mark for the fifth consecutive year and a record 91 delegates attended the pre-conference workshop. 22 exhibitors and sponsors informed and entertained delegates, new and recertifying Certified Credit Executives were acknowledged at the CCE lunch and the National Young Credit Professional of the Year was announced at the President’s Dinner, which was a sell out with 360 delegates and friends.

Veda was the Premium Sponsor of the AICM National Conference for the 6th consecutive year and Veda CEO Nerida Caesar opened the conference with AICM Australian President Frank Vredenbregt.

D&B sponsored the Young Credit Professional of the Year Award for the 16th consecutive year.

AICM is grateful for the support of Veda, D&B and all of our sponsors and exhibitors who contribute to the success of this the largest and longest running credit management conference in Australia.

3 days of high quality professional development and networking coupled with an array of social events including the National Conference Golf Day, Cocktail Party, Certified Credit Executive Lunch, President’s Dinner and the Exhibitors’ Prize Giveaway Session completed a memorable and successful conference.

We now look forward to next year when the 2013 AICM National Conference will be held at the Hilton Adelaide on 23 – 25 October 2013.

Photographs by Ron Freier


2012 National Conference

Cocktail Reception crowd.

Guest economic presenter Jonathan Pain.

Insolvency Panel – Nick Pilavidis, Nick Combis and Greg Young.

Cocktail Reception sponsor CSC held a ‘money-grab’ event.

Conference auditorium.



Exhibition area.MC Peter Buckley.



YCPA National Finalists – Kristy Shrigley (Western Australia), Bassam Sleiman (NSW), Alison Said (VIC/TAS.) Hamish McIntosh (Queensland) and Nick Pontikinas (South Australia).

2012 Young Credit Professional of the Year Award

The Australian Institute of Credit Management Young Credit Professional of the year Award (YCPA) has become the most prestigious and high profile

award in credit in Australia.The 2012 National Young Credit Professional of the year

Awards program was sponsored by D&B for the sixteenth consecutive year.

Over 50 potential candidates were approached by AICM representatives from whom 30 finalists were selected across the five AICM Divisions. The YCP Award dinners were held in each of the five AICM Divisions in July and were high profile events with guest speakers adding to the spectacle of the credit industry’s celebration of its rising stars.

AICM Councillors and past YCPA candidates used their extensive network of contacts to source and assess candidates and to encourage participation. AICM Youth network nights were also held to inform and encourage young credit professionals to participate and eligible students attending AICM Learning Services courses were also encouraged to apply.

The 2012 YCPA National Finalists were;Nick Pontikinas (South Australia), Hamish McIntosh

(Queensland), Bassam Sleiman (NSW), Alison Said (Vic / Tas.) and Kristy Shrigley (Western Australia).

The 2012 YCPA National winner was announced at the 2012 AICM Annual Conference dinner, held at the Marriott Resort, Surfers Paradise, attended by over 360 delegates. The winner was Nick Pontikinas (South Australia).

YCPA National Winner Nick Pontikinas being presented with his trophy by Steve Brown D&B.



Brendan Widdowson, Danielle Woods and Jason Tucker at the D&B table.

National Conference2012

Longstanding Institute stalwart Eric Milne LICM CCE, the National Credit Manager at Fujitsu General (Aust) Pty Ltd and Ulysses Club Member (#49599) again opted to ride his Harley Davidson Electra Glide from his home in Sydney to the Gold Coast for the recent 2012 AICM National Conference. This is the fifth time that Eric has forsaken the luxury and comfort of an aeroplane flight to ride his motorbike to an AICM National conference.

Eric left Sydney on Saturday 6th October and opted for a leisurely two nights and three days ride to arrive on the Gold Coast on Monday 8th after stopping off in Port Macquarie and Byron Bay to catch up with old friends and his family in Tweed Heads. A scheduled business meeting in Brisbane on Tuesday afternoon saw him ride up to Brisbane for the day before returning to the conference venue arriving on Tuesday evening.

We asked Eric why he preferred riding 800 klms in the saddle over the comfort of a short 1.5 hour flight in an aeroplane. I resumed riding about 5-6 years ago after an almost 40 year hiatus. True it is dangerous and motorbike riders are often referred to as “temporary Australians” but I enjoy it and I am not alone. Since I took up riding again I am finding more and more AICM members also ride – I am not alone!

Why do I ride? Fujitsu has a ‘mufti’ day policy each Friday and staff can wear neat /clean casual gear including jeans to work on Fridays. Business suits, shirts and ties are banned! So I ride to work on Friday as I can wear jeans those days. I find when I am on my bike that I am focused on the road and what is happening around me unlike when I drive to work when I spend most of my time in the car thinking about problems that would need my attention when I arrive at the office. On the motorbike I MUST concentrate on the traffic and what is happening around me. I cannot allow my mind to wonder and spend time thinking about work issues. As a result I arrive at work on Friday morning refreshed and relaxed not stressed out from having spent 40 minutes driving and also worrying about work problems/issues.

Why do I ride to the conference each year? There is nothing like a two/three day ride on the open road with the sun on your face, the wind in your hair (I still have some) and the smell of ten day old road kill to clear one’s head and nostrils! I pack my bike travel bag with enough clothes for the ride and the conference. Sometimes I might opt to camp out so I’ll attach my tent, sleeping bag and mattress onto BRUTUS (nickname I have bestowed on my ’08 Harley Davidson Electra Glide) slip a CD of Credence Clearwater Revival into the CD player (CCR’s Sweet Home Alabama blasting from the surround sound speakers makes for an easy ride) start up and hit the highway. As soon

as I am up to speed I turn on the cruise control and just steer! The miles just roll by! Wait a minute there is a CD player and Cruise Control on a motorbike? Excuse me! It’s a Harley Davidson! It also has AM & FM Radio, GPS Navigation, with Bluetooth mobile phone connectivity not to mention a cigarette lighter which is great for hooking up the electric pump to blow up the air mattress when I opt to tent it one night! I have fitted a lamb’s wool seat cover that certainly eases the pain on the butt on a long ride!

Eric jumped on board BRUTUS, adjusted the volume on the CD, started up and rode out of the hotel forecourt heading south to Sydney with the sound of CCR’s Sweet Home Alabama fading into the distance! With the 2013 AICM National Conference set to be held in Adelaide, Eric is already planning his ride down to Adelaide in October 13 and will most likely return via the Great Ocean Road. Another item crossed off his bucket list!

PS Eric would like to hear from other member’s who would be interested in joining him in perhaps riding to the 2013 National Conference in Adelaide. Perhaps if there is enough interest we could look at sponsorship and perhaps raise money for MS or Cancer Awareness or a similar charity? Any starters?

Eric Milne with fellow motorbike rider Kerryann Turner MCIM, Qld Credit Manager, Aurecon Australia Pty Ltd who has already indicated that she is keen to ride to the 2013 AICM National Conference in Adelaide with Eric. (Photo courtesy of Damien Ford Photography)

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Credit Management

tire out or exhaust a debtor, rather than merely convey the demand for recovery”.5 Unnecessarily involving third parties in the collection will also be unduly harassing.6

Creditors who breach these rules may be found guilty of an offence and subject to fines.7 ASIC may also apply for civil orders against the collector, restraining them from future prohibited conduct.8

Practical boundariesThe Federal Court has recently found that a large Australian debt recovery group engaged in misleading and deceptive conduct and undue harassment and coercion of debtors between 2008 and 2010.9

The action was brought by ASIC, which sought declarations from the Court that ACM Group had engaged in prohibited conduct, and orders restraining ACM and its employees from engaging in similar conduct in the future.

Telephone transcripts between ACM and debtors revealed that ACM had engaged in several instances of undue harassing and coercive behaviour, including by calling a debtor’s neighbours and friends, threatening to call a debtor’s employer and relatives and reveal their financial position, and threatening to send a sheriff in a marked car to the debtor’s workplace. ACM staff had also ‘heaped personal abuse’ on the debtors.

Further, ACM had engaged in ‘widespread’ and ‘systemic’ misleading and deceptive conduct, which was in fact called for in the company’s debt collector training manual. Examples of misleading conduct were implying that ACM had commenced litigation (when it had not),

implying that ACM regularly commenced legal proceedings (when it did not) and implying that bankruptcy proceedings would be commenced immediately (when they would not).

Principles to take awayThe importance of acting professionally in undertaking debt recovery has been emphasised by this recent decision. In particular, the question of what will amount to debtor harassment has finally been clarified.

To the extent it wasn’t already obvious, the Federal Court decision now makes it clear that conduct involving threats or lies is likely to be a breach of the Australian Consumer Law and may lead to significant fines and/or other adverse consequences.

To ensure compliance with the federal legislation, creditor professionals must act honestly, and consider whether their conduct is reasonable and necessary in the circumstances. n

*Karl Hill is Managing Director, Results Legal Solutions. Email: [email protected]

FOOTNOTES:

1 Most significantly, the Fair Trading Act 1999 (Vic).

2 s50 Australian Consumer Law; s 12DJ ASIC Act 2001. These sections prohibit all coercion, and not merely undue coercion: ACCC v Maritime Union of Australia [2001] FCA 1549 at [60].

3 s18 Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)); s12DA ASIC Act 2001.

4 Ss 20 & 21 Australian Consumer Law.

5 ACCC v Maritime Union of Australia [2001] FCA 1549.

6 Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164.

7 s12GB(1) ASIC Act 2001; s168 Australian Consumer Law.

8 s12GD ASIC Act 2001.

9 Australian Securities and Investments Commission v Accounts Control Management Services Pty Ltd [2012] FCA 1164.

What is debtor harassment anyway? Guidance from the Federal Court of Australia

By Karl Hill* and co-authored by Anna Trevor

Karl Hill.

A common question for credit managers and debt collectors in recent times has been “what amounts to debtor harassment?” A decision of the Federal Court from October this year has finally provided judicial guidance on the subject.

The legal principlesDebt recovery practice is regulated by ASIC and the ACCC through the ASIC Act 2001 (Cth) and the Australian Consumer Law. Fair trading laws in some states impose additional rules.1 The main principles under these Acts fall under three branches. Creditors must not: i. engage in conduct that is unduly

harassing or coercive,2 ii. engage in conduct that is misleading

or deceptive,3 or iii. act unconscionably toward a debtor

who is specially disadvantaged.4 The meaning of ‘undue harassment’

has been said to be communication “calculated to intimidate or demoralise,

The importance of acting professionally in undertaking debt recovery has been emphasised by this recent decision.


Credit Management

Veda released the results of its business credit demand index for the third calendar quarter of 2012. The results show that the rate of growth in business credit applications picked up by 6.8% in the September quarter compared to this time last year, with indications that the two-speed economy is still evident.

The growth in overall business credit applications reflects quarterly growth over the past year in business loans (+9.5%), asset finance (+9.2%), and trade credit (+3.0%).

The RBA has cut the cash rate by 150 basis points since November last year, and Veda’s business credit data for the third calendar quarter of 2012 indicates that the rate cuts are having a significant effect on business credit enquiries.

“Veda’s Business Credit Demand Index has historically been an excellent predictor for how the economy for each state and our country is moving. Traditionally, GDP correlates with movements shown in the index and the latest data suggests the pace of real GDP growth will remain quite solid in the September quarter,” states Moses Samaha, general manager of commercial risk for Veda.

With overall business credit applications rising in all states over the same quarter last year, the mining states continue to show strong growth with NT (+14.6%) and WA (+10.8%) leading, although Queensland (+6.1%) is further behind. Among the non-mining states, which are expected to benefit most from the RBA’s rate cuts, NSW (+6.1%) and Victoria (+6.4%) are seeing

solid growth, followed closely by SA (+5.6%).

“Lower interest rates have no doubt already helped to support an improved rate of growth in business credit enquiries in the non-mining states of late,” continued Samaha.

Growth in business loan applications also picked up in September from the previous quarter. Among the major states, WA (+12.6%) was again the leader, while business loan growth picked up notably in Victoria (+7.8%), but remains weaker than in NSW (+10.0%) and SA (+9.8%). Queensland (+6.5%) is seeing moderate growth in business loan applications at present. The NT (+48.7%) saw a surge in business loan application activity in September, coinciding with the go-ahead earlier this year of the major Ichthys LNG Project – an indication that business investment is now lifting significantly in the NT.

Asset finance enquiries are continuing to pick-up. The growth in asset finance enquiries over the year to September (+9.2%) was the highest for almost three years. Asset finance has been in a slump since the GFC and despite the latest rise, the level of asset finance enquiries remains well below its pre-GFC peak. Within asset finance, personal loans have gained a larger share of all enquires over the past year, while commercial rental and hire purchase have shrunk as a share of all enquiries.

By state, the mining states of WA (+11.7%), Queensland (+14.8%) and the NT (+16.1%) show relatively strong growth, followed by NSW (+9.0%), Victoria (+5.4%), SA (+3.9%) and Tasmania (-0.6%).

Trade credit enquiries have been less cyclical than business loans and asset finance over the past few years, growing 3% in the September quarter. This line of credit is less dependent on interest rate changes, as it is

Veda’s quarterly Business Credit Demand Index:

Growth in business credit enquiries picks up after RBA cuts•Growth in business credit applications up 6.8% year on year•Mining states show asset finance enquiries growth of 13.8% compared with

7.0% in non-mining states year on year•Results show seven quarters of consecutive growth in business credit activity

Moses Samaha.


Credit Management

used by businesses seeking supplier terms for day to day operations. Within trade credit, 30 day accounts have comprised a larger share of enquiries in recent months. By state, WA (+8.4%) and Victoria (+5.8%) showed relatively strong growth, but SA (+3.1%), NSW (+1.1%) and Queensland (+0.5%) were relatively weak.

Veda’s Commercial Enquiry Indices provide an indication of commercial enquiry levels by industry. The mining industry continued to lead all other industries in terms of the highest share of commercial enquiries relative to industry size in the Veda database, followed by electricity, gas, water and waste services, and wholesale trade. The weakest on this measure were health care and social assistance and administrative and support services.

The Veda Commercial Default Indices showed that transport, postal and warehousing had the highest share of defaults relative to industry size in the Veda database, followed by rental, hiring and real estate services, and manufacturing. All three industries have deteriorated on this measure of commercial defaults over the past year. The construction industry is also experiencing a higher rate of defaults on this measure over the past year – not surprising given the weakness in residential construction and commercial building construction activity at present.

Consistent with an above average rate of commercial defaults, the Veda Commercial External Administration Indices showed

that the wholesale trade, transport, and electricity, gas, water and waste services industries had the highest share of businesses going into external administration in the September quarter relative to industry size in the Veda database. They were closely followed by manufacturing and construction. By state, Queensland had the highest relative share of businesses going into external administration, followed by South Australia, and both states have deteriorated on this measure over the past year. n

Moses Samaha, General Manager of Commercial Risk for Veda. www.veda.com.au

DISCLAIMER: Purpose of Veda media releases: Veda media releases are intended as a contemporary contribution to data and commentary in relation to credit activity in the Australian economy. The information in this release does not constitute legal, accounting or other professional financial advice. The information may change and Veda does not guarantee its currency or accuracy. To the extent permitted by law, Veda specifically excludes all liability or responsibility for any loss or damage arising out of reliance on information in this release and the data in this report, including any consequential or indirect loss, loss of profit, loss of revenue or loss of business opportunity.

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Credit Management

On far too many occasions credit management is nothing more than crisis management or the credit manager becomes the “Red Adair” (the famous oil rig fire fighter) of the receivables ledger!

I am sure that most credit managers today agree they have little time to devote to some items that they have put on their extensive “to do” lists incorporating authorisation of ongoing trading, providing trade references, ensuring payments are received, opening new accounts and ensuring no VA’s or receivers have arrived in the mail!

This does not leave a lot of time for proactive management. How does a credit manager manage their risk?

The phrase risk management is a familiar one to many organisations,

however in regard to the ‘normal’ and liability exposures with credit, it can defined as a logical and systematic method of:

z Identifying z Analysing z Assessing z Monitoring

Thus determining the risks and deciding whether they are to be transferred or retained.

Rarely in an organisation is an appropriate risk management regime applied to one of the most important assets of the business – the debtor asset.

Internal and external controls of risk limitationWearing the credit risk management hat, consider some of the controls that you can manage internally:

z Well constructed terms and conditions of trade incorporating an effective security and collection clauses.

z The establishment of effective and enforceable directors guarantees

z Setting a credit limit level z Setting acceptable payment terms

and ensuring that the debtor sticks to them

z Predetermine acceptable extensions when requested

z Stop credit at an appropriate time and ensure that this message carries right through to the loading dock.

External controls z Know your customer

– Is the legal entity still correct? – What projects are they involved in? – What is the trend in their industry – Do they operate in a high-risk

environment?

– If there is a sudden increase in required credit exposure, is it involved in a project, what is their capacity to handle this, what will happen if a dispute exists or issues regarding variations etc?

– Will they get paid by their customers?

– Can they pay you on time if they don’t?

– Who are your customers’ other major suppliers?

z Attend credit bureau meetings – Acquire information regarding the

credit worthiness of the customer from time to time.

Identifying a maximum probable loss and debtors spread of riskWho in fact are your key risk exposures? What is your maximum probable loss?

In other words, worst case scenario in terms of a bad debt and the ultimate net loss after the pursuit of any security held and the likely dividend after an administrator has finished.

What does your debtors risk profile look like; in fact what does your debtors profile look like?

Have you ever done a spread of risk analysis regarding the structure of your debtor’s ledger? Typically your key accounts, although only 20% in number, account for 80% in value.

It is an exercise that many companies should consider and one that is always done as part of a review of credit exposures either for insurance or for credit risk management and indeed there are companies around who will analyses and give you direct feedback of this.

The ‘catch-cry’ of risk management is to be on the front foot and fundamentally try to ‘pre-empt’ the possible likelihood of a default. Needless to say insurance is all about a crystal ball? No-one is bullet proof, but some people are more bullet proof than others. n

*Simon Chown is General Manager (Southern region VIC, SA, WA & ASIA), NCI Brokers.www.nci.com.au

Fire preventionBy Simon Chown*

Simon Chown


Credit Management

Business-to-business payment times have fallen by five days since the height of the global financial crisis, but cash flow pressures remain prevalent as firms are being forced to wait more than three weeks longer than standard terms to receive payment for goods and services.

The latest Dun & Bradstreet Trade Payments Analysis, which examines the millions of accounts receivable records contained on the D&B database, reveals that average payment times have dropped from the ten-year peak of 57.4 days seen in the first quarter of 2009. Despite dropping to 52.5 days in the September quarter 2012, payment times have not reached the low of 47.1 days recorded in the second quarter of 2003.

The analysis indicates payment times, which have not fallen below the 50 day mark in eight years, also typically rise by around two days in the first quarter of each year post-Christmas.

According to D&B’s CEO, Gareth Jones, while payment terms remain significantly above the standard 30 day term, the slow and steady reduction in payment days over the past few years indicates that the cash flow position of firms has improved.

“It is certainly positive that Australian firms have cut their payment times by close to a week since the height of the financial crisis, and despite a slight deterioration in the June quarter of 2012, the trend has generally been encouraging,” said Mr Jones.

“However, trend data shows that payment times traditionally rise post-Christmas. This means an uptick in payment days is likely during the March quarter 2013 and could result in increased cash flow pressure for businesses.”

In comparison, New Zealand – Australia’s close neighbour and one of its top ten trading partners – recorded payment times of 40.3 days during the September quarter. Payment times for Kiwi firms, which were nearly two weeks shorter than their Australian counterparts, reached their lowest level in nearly a decade.

But despite New Zealand businesses recording significantly shorter payment times, the time taken for Australian firms to pay their bills has been trending downwards since the GFC.

This trend aligns with recent Australian Business of Statistics data indicating ongoing economic growth. Gross domestic product rose by 3.7 per cent in the year to June 2012 and is forecast by Treasury and the Reserve Bank to remain around trend at three per cent in both 2012-13 and 2013-14.

However Stephen Koukoulas, Economic Advisor to D&B, believes there are a number of external threats to the Australian economy over the next year. “The recession in the Eurozone shows no signs of ending and there is no firm evidence that the Chinese slowdown has reached the bottom. If the economy slows further than is currently forecast, payment times could rise. Offsetting that is the prospect of more interest rates cuts from the RBA.”

Adding to the positive September quar-ter results is the performance of a number of industries, in particular the forestry sector, which cut the time taken to pay their bills by six days to 54.2 days year-on-year. This was followed by firms in the fishing industry, down 2.5 days year-on-year.

The quickest payers were those in the agriculture and transportation industries, recording payment times of 49.3 days and 49.8 days respectively. Both industries improved their payment times by nearly two days each quarter-on-quarter and are on par with figures 12 months ago.

Surprisingly, mining companies were the slowest payers at nearly 56 days, rep-resenting a marginal increase in the past 12 months, despite accounting for around eight per cent of total GDP. This was fol-lowed by firms in the finance, insurance and real estate sector and the electric, gas and sanitary services sector at 54 days each.

“Favourable prices and growing conditions are no doubt behind the lower payment times in agriculture, while lower global mineral prices and slower growth in profits is likely to be dampening the mining sector,” Mr Koukoulas says.

“Based on the most recent payments data, no particular sector of the economy is performing poorly which fits with the scenario of the economy evening out in recent quarters.” n

Note: D&B’s Trade Payments Analysis utilises the accounts receivable records of Australian firms. The D&B database contains millions of current trade references, which are analysed and segmented by various demographics.

Payment times are down five days since the height of the GFC but a post-Christmas spike is expected

Average payment times, 2007 – 2012


Credit Management

Proceedings The proceedings against one of the guarantors were commenced in the appropriate Court in Australia and were ultimately served.

The Defendant entered a defence to the claim. Over the next eight months, interlocutory steps were pursued.

Proof of ClaimConsiderable time was spent on disclosure of documents and provision of particulars of the Plaintiff’s claim.

The transactions spanned a number of years and involved tens of thousands of transactions and more documents. Ultimately, substantiation of the debt came down to proof of each invoice and the related documentation.

Some of the documentation had been destroyed in the usual course of business and the only proof of those transactions was contained in the Plaintiff’s accounting system.

The Defendant sought, as was his right, to have the Plaintiff prove each and every invoice, and ultimately the Plaintiff provided copies of all the archived documents.

The amount and make-up of the

debt came down to proof of the Plaintiff’s records, which involved producing a number of extensive reports that particularised the debt.

Communication Throughout the matter, the Plaintiff maintained communication as best they could with the guarantors. Despite these endeavours to discuss and reach a settlement, ultimately, the offers that came back were unsatisfactory and the action did not settle as a result of these discussions.

InvestigationThroughout the action, necessary enquiries were made to try and establish that the Defendant had, in all likelihood, sufficient means to satisfy what was a substantial debt. This process also identified a number of groups, both in Australia and internationally, who can undertake thorough searches to give a creditor the confidence to embark upon the often very expensive process to pursue and ultimately, to recover, a debt.

MediationEven though the mediation was in

Case study:Ultimately it’s always about proving your debtBy Peter Ryan*

Peter Ryan.

If only businesses were this upfront. Fortunately, there’s Dun & Bradstreet. No matter how big or small your customer or prospect is, we’ll give you the complete view of their risk profile with a comprehensive credit check. To see how we can help you visit our website www.dnb.com.au or call 13 23 33.

“Before we do business, I should point out my company is about to go into liquidation”

BackgroundHemming+Hart Lawyers, received instructions from an overseas factoring creditor to act on their behalf. The creditor claimed some millions of dollars from a company that had gone into liquidation and it wanted to pursue guarantors of the debt out of its jurisdiction.

Because Australia and the creditor’s country had no treaty regarding enforcement of each other’s judgments, a decision was made to commence proceedings in the country of residence of each guarantor.


Credit Management

Australia, all the parties to the original transaction from overseas were present. The matter was settled after a lengthy mediation by the Plaintiff in respect to the Australian action Part of the mediation involved an examination by the Defendant of one of the Plaintiff’s executive officer who flew out to Australia for the purpose of the mediation. As a result of the officer’s excellent presentation about the debt and his ability to link each component of the debt (including the principal debt, interest and fees and expenses) to the Debt Facility Agreement, the quantum of the debt and its legal basis was confirmed and the parties proceeded to settle the action.

SummaryThe lessons to be drawn from this case study are, in my opinion:1. Be prepared to prove every aspect of

your claim and maintain good records which will be essential in the proof of any claim.

2. Ensure that the debt that you are

pursuing is fully supported by the Credit Agreement you have with the Defendant.

3. The debt, no matter how complex or lengthy, should be fully particularised and each particular supported by appropriate documentation in simple, understandable terms.

4. Proper particularisation of your claim early will avoid lengthy interlocutory steps and will make it easier for your lawyers to run your case.

5. Be prepared to provide all the documents necessary on disclosure of documents, no matter how extensive a task it may seem. This will both support your claim and assist in resolving the matter if such a resolution is possible.

6. Make settlement offers as early as possible for amounts, when all things are considered, that are reasonable.

7. Mediations work. It is often the only chance you have to resolve a matter face-to-face and save costs prior to being immersed in an expensive trial preparation process.

8. Approach mediations seriously and prepare for them as you would for a trial. Have your principals or executives and if necessary, key witnesses, available to appear at the mediation to convince the Defendant of the seriousness of your intent and approach.

9. Be prepared to invest money and time into your case. If you have decided that it is worthwhile to run to trial, than it is worthy of the right preparation to achieve the best result. It will often result in the matter settling. Ultimately, this matter came down

to demonstrating that the Plaintiff could prove its claim, whereupon the parties saw the benefit of settling early at an agreed figure and thereby controlling the outcome of the action and costs. n

Peter Ryan is Executive Counsel for Hemming+Hart Lawyers and is part of the HemLaw Recovery management team. www.hemlawrecovery.com.au

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Credit Management

should receive an equal distribution of net assets. Liquidators have a strong incentive to pursue unfair preference claims so they can claw back debt payments made to creditors for redistribution (or put towards costs of the liquidation). The liquidator can claim preferential payments made six months before commencement of a winding up (legal terminology: six months before the ‘relation-back date’).

How can you fight an unfair preference claim?Three arguments that can be used to defend an unfair preference claim are:1. Debtor company solvency2. No suspicion of insolvency 3. Running balance calculation

If the matter goes to Court the liquidator needs to prove that the debtor company was insolvent at the time the payments were received. It is usually a safe bet that a liquidated company was insolvent but it is a factual matter that needs to be proven by the liquidator. One approach may be to evaluate insolvency by seeking evidence, up front, from the liquidator to confirm insolvency at the time the first payment was received.

Otherwise, there is a defence (that the Credit Manager bears the onus of proving) known as the good faith defence. The three limbs of the defence to be proven by a preferred creditor are:1. That the payment was accepted in

good faith (nothing smells); 2. That valuable consideration was

provided by the creditor (the creditor sold the debtor a product); and

3. That the creditor or a reasonable person in their position had or would have had no reasonable grounds to

suspect the debtor was insolvent (you had no reason for concern regarding repayment). The problem with the good faith

defence is that the “no suspicion” of insolvency test is often burdensome for a preferred creditor to prove. A Court will take into account emails, bounced cheques, part payments, instalment arrangements, deteriorating terms of payment and other factual matters in consideration against the preferred creditor.

A liquidator is required to make a calculation to take into account the running balance between a debtor and creditor over the six months before the commencement of winding up. Practically, this means that you should calculate a possible preferential amount as the difference between the highest amount owing during the relation-back period and the amount owing at the time of winding up of the debtor company.

Get a Purchase Money Security Interest!The Personal Property Securities Register (PPSR) provides an accessible mechanism by which a trade supply can become a secured creditor. Once a creditor becomes a secured creditor, they have a further defence to potential unfair preference claims as a liquidator cannot maintain unfair preference claims against secured creditors. In fact, the PPSR has opened up an opportunity for ‘unsecured’ creditors to not only gain ‘secured’ status, but a ‘super-priority’ over other creditors in the event of insolvency.

A Purchase Money Security Interest (PMSI) is defined broadly in the Personal Property Securities Act (PPSA) to include

Using PPSR to defend unfair preference claimsBy Ben Sewell and Brooke Payne*Caroline is a terrific Credit Manager, she is proactive and uses both IT and skill to keep her company’s debtor days to acceptable levels (she is an ace really). Her company sells commercial products and the CEO loves Caroline because she always presses for payment and she even keeps the sales force in line. Unfortunately, because Caroline is so good at what she does she gets occasional unfair preference claims from liquidators of debtors. This article discusses how Credit Managers can use the new Personal Property Securities Register to protect their company from unfair preference claims.

Ben Sewell.

Why do Credit Managers worry about unfair preference claims?The fact is that unfair preference laws penalise the best Credit Managers. The faster and more effective Credit Managers get the best results and they outshine pedestrian Credit Managers. Being preferred to other creditors makes the best Credit Managers vulnerable to unfair preference claims after their debtors go into liquidation. There is nothing more frustrating for a Credit Manager than receiving an unfair preference claim from a liquidator.

Sum it up – what are unfair preference claims?A transaction is an unfair preference if the creditor received more of an unsecured debt than the creditor would receive from the company by proving in the winding up for a dividend. This means a preference over and above what all the other creditors receive after the debtor goes into liquidation. The justification for this law was originally the principle of “pari passu”, that each creditor of a liquidated company


Credit Management

a security interest granted in exchange for finance or value required to purchase or acquire rights in collateral, and includes the interest of retention of title suppliers. Because of the broad definition in the PPSA, a PMSI can be taken over any kind of collateral and result in arrangements not considered to be security interests under the old law. This means that if you trade under a retention of title clause and register your interest on the PPSR, you will gain ‘super-priority’ in the event of liquidation of a company and you will be protected from potential unfair preference claims by liquidators.

One potential problem if you need to contest litigationAn important qualification to the scope of the defence is that the preferred creditor would need to prove the amount of their security. This may mean demonstrating (for a Retention of Title supplier) the amount of product held by the purchaser at the time the preferential payment was received. There is no case law on this point yet but it is worth being aware of.

How should Caroline start business process improvement:1. Speak to a lawyer about whether the

PPSR applies to her business2. Look for business process improvement

through benchmarking exercises3. Update customer contracts (such as

credit applications and terms of trade)4. Ensure security interests are perfected

(i.e. registered on the PPSR)5. Ensure that PMSIs are registered

within required timeframes (i.e. transitional interest issue)

One methodology for business process improvement is Gap Analysis (5 steps to meet objective of process improvement):1. What is the current business process

and how is that documented?2. In what way will the PPSR change the

business practice?3. What gaps exist between what is

currently being done and what needs to be done?

4. What document changes are needed?5. What process changes are needed?

What clauses should your lawyer put into the improved customer contract?1. Purchase money security interest clause2. Confidentiality clause3. Waiver of notification clause4. Waiver of compliance steps in

enforcement proceedings clause

Quick list for complying with the PPSR (for commercial product suppliers)1. Ensure you are trading under

retention of title terms and that your terms include a right to register a Purchase Money Security Interest;

2. Register your interests on the PPSR (www.ppsr.gov.au) or upload through an agent and provide necessary information regarding the interest itself, collateral and the grantor’s details; and

3. Budget for the registration fees. n

*Ben Sewell and Brooke Payne are Principal and Lawyer, Sewell & Kettle Ph: (02) 8251 0075Email: [email protected]

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Credit Management

In the case of Barclays Bank plc [2012] NSWSC 1095, the Supreme Court of NSW recently made orders allowing a secured party a later time for registration of its interest on the PPSA register after it failed to lodge its interest within the specified time.

Who does this impact?Financiers and suppliers of goods who take security interests over personal property that requires registration under the Personal Property Securities Act 2009 (“PPSA”).

What does it mean?Financiers and suppliers of goods must be aware of time frames for registration of security interests. Should they be remiss, they may undermine the protection of such security interests and may find their interest is unenforceable.

The Court will grant extensions of time for the deadline for registration to avoid the interests being void under s588FL of the Corporations Act (Cth) 2001 (“the Corporations Act”) provided there is no prejudice.

Relevant legislationThe Corporations Act

z Section 588FL provides that: – A PPSA security interest registered

over a company’s asset which has not been registered within the designated time will vest in the company if the company goes into administration, liquidation or executes a deed of company arrangement (“the critical time”).

– For PPSA security interests arising from security agreements, the designated time the security interest must be registered is the later of 20 days after the date of the security agreement or six months prior to the critical time.

z Section 588FM allows a court to fix a later time for registration of a PPSA security interest under s588FL.

The proceedingsBackground facts

z In January 2012, Sportingbet plc executed an agreement with Barclays in relation to a UK £8 million term loan facility provided to Sportingbet plc by Barclays (“the Facility Agreement”).

z An Australian company, Centrebet International Pty Ltd, a subsidiary of Sportingbet plc (“Centrebet”) was also party to the Facility Agreement and granted security to Barclays by executing a General Security Deed with Barclays on 24 April 2012.

z Barclays retained legal advisers to provide a legal opinion in respect of the enforceability of the General Security Deed over Centrebet. That legal opinion relevantly stated (in accordance with s588FL(2) of the Corporations Act): “... in order to perfect the security interest created under the deed in respect of the collateral to which it attaches…a financing statement should be registered…in compliance with the PPSA within 20 business days of the day the deed comes into force...”

z The PPSA registration over Centrebet was not registered by Barclays until 9 August 2012, 108 days after the registration deadline.

z Relevantly, between 23 May 2012 (the end of the 20 business day registration period) to 9 August 2012 (the date of registration), there had not been any material change in Centrebet’s financial status.

z Also, Centrebet had not granted any security to any other creditor other than security that would arise by common law or statute in the course of its ordinary business.

You snooze,you may lose –Why PPSA registration deadlines matter

By Daniel Turk and Loren Smith*

Loren Smith

Daniel Turk


Credit Management

z Barclays approached the Court for an order under section 588FM of the Corporations Act fixing 9 August 2012 as the registration time for security interests granted to Barclays by Centrebet.

z Centrebet consented to Barclays’ application to extend the time for registration of its security interest.

z Having the registration time extended meant that Barclays interest would not be at risk of being void under s588FL if Centrebet went into administration or liquidation.

Decision z A decision to extend the time for

registration of Barclays’ security interest to 9 August 2012 was made, under section 588FM of the Corporations Act.

z His Honour Black J was convinced that the failure to register the relevant security interests within the designated timeframe was due to inadvertence by Barclays’ legal advisors.

z In justifying this decision his Honour

referred to cases in respect of section 266 of the Corporations Act, which is comparable to s588FL(2) of the Corporations Act. Relevantly, section 266 of the Corporations Act provides that in situations where a company is in administration or liquidation, a charge on that company’s property is void as security against the administrator or liquidator unless notice of the charge is given within a specific timeframe.

z In this instance, however, his Honour was also satisfied that it would be a proper exercise of the court’s discretion to make an order under s588FM of the Corporations Act fixing a later time for registration of the security interests in this case, relevantly the date of registration of the security interests on 9 August 2012, having regard to: – The evidence as to Centrebet’s

strong financial position; and – The fact that the risk of prejudice

to other creditors from such an order is remote.

Comment z Financiers and suppliers need to

register their security interests in time. z The length of the delay prior to

registration of the security interest is a relevant factor in the application of the court’s discretion under s588FM to extend the time for registration.

z An extension of time may be given on the basis that it does not prejudice the rights of any person who has, between the date the security interest was granted and the date of registration, obtained any security over the collateral subject to the security.

z Registration should be at the same time as a security agreement is entered to best protect a secured partner interest. n

*Daniel Turk is a Partner at TurksLegal. Ph: (02) 8257 5727 Email: [email protected]

*Loren Smith is a Lawyer at TurksLegal. Ph: (02) 8257 5775 Email: [email protected].

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Consumer Credit

Veda has released results from the largest Comprehensive Credit Reporting (CR) simulation ever undertaken in the region.

Timed to coincide with the passage of the Privacy Amendment (Enabling Privacy Protection) Bill 2012, the Veda Comprehensive Credit Reporting Pilot models outcomes from real Australian data to demonstrate the impact of the most significant changes to credit reporting since 1988*.

Under the proposed changes to the Privacy Act, Australia will move away from negative reporting to introduce comprehensive credit reporting in line with the majority of OECD countries.

This additional information about consumers’ credit obligations (such as a mortgage, personal loan, credit card) will include the following information about the account: status (open/closed), limit, type of credit and for licensed lenders up to 24 months of repayment history.

The Veda Comprehensive Credit Reporting Pilot has combined de-identified account records across ten lenders, mapping real data from credit cards, mortgages, personal loans and auto loans to a create cross-industry view of millions of Australian credit accounts.

Data shared under pilot conditions has identified that the predictive power of Veda’s bureau scores can be improved by up to 40%, with the modelling revealing new insights about the credit profiles

and behaviours of Australian consumers. For example, consumers with a credit card and a mortgage are 20% less of a default risk than those without a home loan, whereas having a personal loan can increase the risk of default more than threefold.

Although the sharing and use of data will be opt-in only, Veda’s analysis of pilot data indicates that institutions who actively participate will be able to improve the performance of their portfolios - potentially granting greater access to credit for those previously shut out from the mainstream system, while keeping bad debt steady by controlling credit extended to others.

Nerida Caesar, Veda CEO, commented:

“Our pilot provides a new composite picture of accounts and demonstrates how different and better data will benefit all Australians. Lenders have the information needed to make responsible choices about what credit to extend to whom, while consumers will be empowered to get the best deals for their own circumstances, developing a higher level of ‘credit consciousness’ in the process.

“This change in legislation is effectively micro-economic reform. Comprehensive credit reporting provides improved sharing of information, leading to better credit issuance, credit product and services innovation, as well as

Credit revolution close to crunch time Veda Pilot Spotlights the Impact of Comprehensive Credit Reporting• Passage of Privacy Amendment

(Enabling Privacy Protection) Bill 2012 to initiate new era for credit issuance in Australia

• Australia now has a detailed case study of the benefits of Comprehensive Credit Reporting – using de-identified account records from ten lenders to model the impact of additional data on credit risk assessment

• The study indicates that more data, more often will drive up to 40% improvement in credit bureau scores predictive accuracy

• With lenders having access to additional data, consumers are likely to have greater accessibility to credit – recognising good credit behaviour while delivering a fairer system for those who may have experienced difficulties in the past

• Lenders will be able to provide more differentiated and segmented offers to consumers based on levels of risk

Nerida Caesar

Under the proposed changes to the Privacy Act, Australia will move away from negative reporting to introduce comprehensive credit reporting in line with the majority of OECD countries.


Consumer Credit

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Other insights from the pilot show: z The riskiest combination of account

holders were those with personal loans and credit cards (6.4% of the sample)

z It’s not the range of credit that necessarily makes a difference to an individual’s risk, it’s the range of lenders

z Only 10% of the sample had four accounts but of these, one third spread their credit over three or four lenders.

z The most pronounced end of the spectrum, those with four accounts across four lenders, had a delinquency rate 6 times higher than those with four accounts with just the one lender Caesar continued: “The changes will

be significant and the Pilot has helped our customers plan for the kind of shared data environments their international

peers and partners have been working in for years.

“Based on experience overseas, we can expect to see consumer credit consciousness increase quickly as the industry uses the coming months to start rolling out new CR policies and products. Consumers now need to be more aware and understand that how they manage all their credit lines with lenders will now be visible on a credit file and used by lenders to help make credit risk decisions. Veda will continue to be at the forefront of public education and support, supporting borrowers and lenders to have fair, informed conversations about credit.” n

www.veda.com.au

*About Comprehensive Credit ReportingUnder the provisions of the Bill, Australian lenders will have access to different and better data to help them lend responsibly. At the moment lenders ask their customers to provide particular information through their own application processes, and data held by a credit bureau such as Veda is used as part of their lending decisions.

Bureaus like Veda provide additional data on individuals. At the moment this data is primarily negative because it only provides ‘bad debt’ information such as defaults and public record information like writs and court judgments. Current credit files also include credit enquiries, but an individual’s credit file is only updated when a new application for credit is made (even if an account is never activated).

The shift to positive (or comprehensive) reporting means that data will be collected monthly and the type of information collected will expand to what is called a 4+1 model:• The type of each active credit account• The date of the opening of each credit account• The date of the closing of each credit account• The credit limit of each individual account• Credit repayment history over the past 24

months (this last one is available only to Credit Licensees)

DISCLAIMERPurpose of Veda media releases: Veda media releases are intended as a contemporary contribution to data and commentary in relation to credit activity in the Australian economy. The information in this release does not constitute legal, accounting or other professional financial advice. The information may change and Veda does not guarantee its currency or accuracy. To the extent permitted by law, Veda specifically excludes all liability or responsibility for any loss or damage arising out of reliance on information in this release and the data in this report, including any consequential or indirect loss, loss of profit, loss of revenue or loss of business opportunity.


Legal

The FactsIn 2009 the Commissioner of Taxation initiated proceedings in the Brisbane District Court against Mrs Milanka Bassili, the relevant taxpayer, for unpaid tax and general interest charges which were allegedly outstanding.

As at 2 January 2010, Mrs Bassili was said to be indebted to the Commonwealth in the sum of $75,508.64. On 19 January 2010, Mrs Bassili entered into a contract for the sale of land owned by her at Fig Tree Pocket but which was also the subject of two prior registered mortgages in favour of National Australia Bank Limited (“the Bank”) and Instyle Developments Pty Ltd (“Instyle”) respectively.

Due to matters not relevant to the proceeding, the sale price of the land was insufficient to discharge the debts owed to the respective mortgagees.

On 5 February 2010, Dr Lloyd Tang, an additional creditor of Mrs Bassili, sought a sequestration order from the Federal Magistrates Court pursuant to section 50 of the Bankruptcy Act 1966 (Cth). This order, amongst other things, saw Mr John Park, a registered trustee (“the Trustee”), take control of Mrs Bassili’s estate while the contract for sale was on foot.

Prior to settlement of the contract, the Commissioner served upon the purchasers of the land a garnishee notice pursuant to section 260-5 of Schedule 1 of the Taxation Administration Act 1953 (Cth) (“the TAA”).

The garnishee notice required the purchasers to pay part of the purchase price to the Commissioner in discharge of Mrs Bassili‘s tax debt. This notice, the Commissioner contended, entitled him to a portion of the proceeds sufficient to discharge the debt owed by Mrs Bassili to the Commonwealth in priority to Instyle’s second registered mortgage.

Despite delays, settlement was ultimately effected on 23 February 2012 when, by consent, the monies the subject of the garnishee notice were paid into trust, and later into Court.

The matters to be determined by the Federal Magistrate at first instance, and by the Full Court of the Federal Court on Appeal, were: 1. whether the proceeds of the sale were

monies due to Mrs Bassili pursuant to the contract of sale of the land;

2. whether, upon the release of the mortgage, the mortgagee held an equitable charge over the proceeds of the sale; and

3. whether the proceeds of the sale were monies available to the Commissioner and to which a garnishee notice could attach.

The Federal Magistrates DecisionAdopting the observations of Connolly J (with whom Shepherdson J agreed) in Tricontinental Corporation Ltd -v- Commissioner of Taxation [1988] 1 Qd R 474 (“Tricontinental”), the learned trial judge ultimately held that the monies comprising the purchase price for the property were not, in reality, owing to Mrs Bassili but rather were the subject of an analogous floating charge in favour of Instyle.

Consequently, Mrs Bassili did not have a sufficient interest in the purchase monies to which a garnishee notice issued by the Commissioner could attach.

The basis of this reasoning was, as set out in Tricontinental, that upon the mortgages being released, the beneficial interest in the purchase monies vested in the respective mortgagees and not Mrs Bassili. This, it was said, was akin to a floating charge in favour of the respective mortgagees crystallising over the purchase monies at the moment the mortgages were released and the purchase monies exchanged.

It was then the case that, in the above scenario, the beneficial interest in the purchase money would never come to rest with Mrs Bassili and, consequently, there was no debt owed to Mrs Bassili by the purchaser to which the Commissioner’s notice could attach.

Top Priority -A recent decision of the Federal Court of Appeal

By Michael Stretton and Paul Rojas of Rostron Carlyle Solicitors

Paul Rojas

Michael Stretton

From their roots in the twelfth and thirteenth centuries, mortgages have been, and remain, an important means of capital raising for individuals and companies alike.

The protection offered by a registered mortgage, and the right to a priority payment upon the liquidation of the secured asset above unsecured creditors, is accepted as the base of modern security agreements.

Never has the belief in the fidelity of a registered mortgage been more evident than in the foolhardy lending practices displayed by banks in the years preceding the Global Financial Crisis.

A mortgagee’s right to this priority payment in circumstances where the mortgagor also owes an unsecured debt to the Commissioner of Taxation has, however, been called into question. Such was the focus in the recent decision in the matter of Commissioner of Taxation -v- Park [2012] FCAFC 122.


Legal

As a result, the learned trial judge found in favour of the Trustee, a decision which, on appeal in the current matter, was overturned by a majority of 2 to 1.

The Majority Decision In joint reasons handed down by Jessup and Katzmann JJ, the majority ultimately accepted the Appeal brought by the Commissioner. Rejecting the Trustee’s submissions, their Honours found that the instant moneys became owing by the purchasers to Mrs Bassili, the former fell under a statutory obligation to pay those moneys to the Commissioner.

In reaching this conclusion their Honours ultimately rejected the “floating charge” analogy relied upon by the Federal Magistrate at first instance, finding that the respective mortgagees’ interest was in the land itself and not the purchase monies.

Upon settlement being effected, Mrs Bassili was in a position, by virtue of the release of mortgages provided by the relevant mortgagees, to deliver up unencumbered title to the property.

The purchasers were then under a contractual obligation to perform their obligations under the contract by presenting to Mrs Bassili the whole of the purchase price, including the monies owing to the Commissioner.

It was at this point, the Court found, the purchasers’ obligation to pay to the Commissioner under section 260-5 of the TAA became absolute.

While alternative arguments were submitted by counsel for the Trustee, these were also dismissed by the majority in favour of the above reasoning.

Jessup and Katzmann JJ consequently found that if there was a discernible

point at which Instyle had compromised its position, it was when it released it registered mortgage over the property.

The Dissenting VoiceIn delivering separate reasons, His Honour Siopis J found against the appeal for similar reasons to those of the primary judge.

In distinguishing himself from the majority, His Honour ultimately agreed with the Trustee’s contention that at the time the bank cheque was delivered to Instyle’s solicitors at settlement, the payment was made as part of a simultaneous process whereby the purchase price was paid, the charges under the registered mortgages were released and the transfer of the unencumbered title delivered.

Consequently, and consistent with the primary judge, His Honour agreed that no monies were ever received by Mrs Bassili upon which the Commissioner’s demand could operate.

The OutcomeWhilst at the time of writing this article, the judgment handed down by the Full Federal Court of Appeal is the subject of a yet-to-be determined special leave application to the High Court, the message to secured creditors is clear.

With the recent amendments to the TAA and other Commonwealth legislation, as well as the Australian Taxation Office’s more stringent approach to the fiscal responsibility, creditors should be reticent to release their security where it is known, or suspected, that the debtor owes a debt to the Commissioner.

In these circumstances, it is recommended that pause for thought be had as to the true nature of the security

held by the creditor and the movement of funds upon release.

As was highlighted by the majority in this case, the point at which Instyle could have protected its priority was at the time of settlement. Arguably, and with the benefit of hindsight, had Instyle simply refused to release its mortgage in the circumstances and exercised its right as mortgagee in possession, its priority would have been preserved.

Though limited to its facts at this stage, there is again arguably scope for the reasoning of the majority to be extended to other security interests, that being for example, interests registered under the Personal Property Securities Act 2009 (Cth).

Should the Federal Court of Appeal’s decision be confirmed, it is possible that the Commissioner may attempt to intercede at the point of sale of an encumbered chattel in a similar fashion as he did in the above matter.

In this case, if special leave be granted, it will be for the High Court to decide whether the reasoning adopted by the majority was sound.

As in Mabo v Queensland (No 2) [1992] HCA 23, the matter of Commissioner of Taxation -v- Park has the makings to potentially “fracture the skeleton of principle[s] which gives the body of our law its shape and internal consistency”.

Until this matter is finally decided however, the ultimate result for the Australian community at large is simply: watch this space. n

*Michael Stretton and Paul Rojas. Rostron Carlyle Solicitors, Level 15, 270, Adelaide Street, Brisbane, QLD 4000, Ph: (07) 3009 8423 Email: [email protected]

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new south wales

AICM NSW #1 Credit Team – Dare to Inspire 2012Very excited to announce that this year’s winner is CHEP Australia! Fabulous effort guys and congratulations!

The teams selected as finalists this year (Peoplebank, Dynaweld and CHEP), all showed the judges and the rest of the industry what can actually be achieved when you have a team that works together and knows what their goals are. Congratulations to all, and you should all be very proud.

Thanks again to our wonderful judges this year for giving up their time, and being so involved with the program – Debbie Leo, Andrew Le Marchant (LICM) and Harry Bonning.

Also a VERY BIG thank you to our event sponsor Veda, not only for the financial assistance in the program, but for the involvement of their marketing team, to assist in the facilitation of this years program. Also, this year there was a “new twist” to the process, with Veda providing a personal development day for all the teams at Fox Studios. All team members that attended say that the session was invaluable, not just for the judging process, but for them personally.

This year’s program was capped off by the End of Year Awards Dinner at Rydges, where the winner was announced! CHEP requested that if they were announced as the winner that we play a specific track for their acceptance – lets just say that their rehearsed GANG NAM STYLE dancing on the dance floor was awesome! (I wish you could post videos to print media!)

Again, this award not only highlights achievements, but makes credit teams stronger, and also allows for people that normally don’t really think much about what they do, they just do it, to have the opportunity to really analyse their processes, themselves and their team, and regardless of who the winner was this year, all teams that participated have learnt a lot about themselves and their teams. Looking forward to 2013!

– Vanessa Graydon MICM, NSW Credit Team Co-ordinator

NSW Youth Network NightOn the 23rd of October 2012, the AICM NSW Council hosted one of their youth network nights: “Minute To Win It “ was held at The Vine Bar – Madison Hotel.

It was an extremely well-received event with members and their associates turning out to meet and participate in energised group games alongside their peers from the credit world.

The evening was a very successful and fun evening with smiling faces all round. It was a great way to interact, share drinks and share a nice meal alongside both new and familiar faces.

The night was made possible by the support of Carlos Jaramillo and his team from William Roberts Lawyers and Trace Personnel who supported and sponsored the prizes. Many thanks to Gregg Odlum who organised this amazing night and to Baz, Sam, Grant, Treacy and Emma from the NSW council for their assistance and wealth of knowledge on the night.

The event was one of many ways to welcome new faces to the credit community in a fun and encouraging way to ask questions and increase awareness for youth development within organisations.

Thank you to all of those who came along on the night and hopefully we will continue to see you all in our next events.

– Baz Sleiman

Certified Credit Executive Dux 2012 – Rebecca PettitLike others before me, I had previously made excuses for several years to avoid sitting the “dreaded” three-hour exam that was previously a requirement in order to gain CCE status. However, as the system of certification had

Andrew Le Marchant receiving his Life Member award from NSW President Nick Pilavidis.

Fun and games at the Youth Network Night.

…and the winner is!

John Field – new Fellow, with Baz Sleiman.

➤



new south wales

changed, and the exam no longer existed, I had now run out of excuses to convince myself why I should not apply. Although I had been employed within the credit industry for over 13 years, a Member of the Institute of Credit Management (MICM) for the past 7 years and having been awarded state finalist in NSW for Young Credit Professional of the Year Award (YCPA) twice, I decided in 2011 that I was finally going to apply.

Initially apprehensive, I found the process to be straight forward. Following confirmation that I had acquired the minimum 100 CCE points and knowing that I had met the required Minimum of 3 years as MICM, I submitted my application – There was no turning back! In September 2011 I completed Stage 1 - the online examination which comprised of 10 True/False, 10 Multiple choice and 10 short answer questions. (I completed stage 1 in the comfort of my own backyard, with my laptop and cuppa at my fingertips – Although classified as an “exam” this was definitely not the HSC style exam environment that springs to mind). Having submitted my responses, I was eager to learn whether I had successfully passed stage 1. Much to my delight, confirmation of this came through about two weeks later. I then set about (over the next 5 months) completion of Stage 2 - my professional based essay which I submitted in February 2012 before the commencement of the next Stage 1 on-line exam in order to avoid myself having to re-sit it again.

NSW Credit team of the year finalist,Doris Robinson and Cindy Ren, from Dynaweld.

2012 NSW Credit Team of the Year Judges, Harry Bonning, DebbieLeo, Andrew Le Marchant.

Vanessa Graydon receiving the NSW President’s award from Nick Pilavidis.

Peoplebank credit team at the Professional Development session – Kitty Cardwell, Sarah Gordon, Pratikshya Singh, Nicky De Ridder.

NSW Dinner lucky chair prize winner, Jamie Lee Horder.

Not only was I successful in achieving CCE status in May 2012 but much to my elation, I was also awarded Dux for 2012 which was announced at the National Conference in Surfers Paradise QLD in October. The process of gaining CCE certification provided myself with an opportunity to reinforce, refresh and broaden my knowledge in credit management and also obtain national qualification and recognition. I would like to encourage all MICM’s eligible to apply for CCE status to do so as I am sure, like me, you will find it a worthwhile and rewarding experience in which you never know what opportunities it may present or what doors it may open.



queensland

The Australian Institute of Credit Management New South Wales

welcomes the following organisations as our sponsors for 2012

The Australian Institute of Credit Management and our Sponsors benefit from a cooperative and supportive relationship that provides high profile branding opportunities to sponsoring organisations and gives the credit industry greater recognition and the opportunity to work together to promote best practice in the credit industry and in so doing provide professional development opportunities for credit

practitioners in Australia.

(From left to right) The Honourable David Clarke MLC, Parliamentary Secretary for Justice, The Honourable Marie Ficarra MLC, Parliamentary Secretary to the Premier of NSW, NSW YCP and Parliament Commendation recipient Baz Sleiman, The Honourable Shaoquett Moselmane MLC and Vincent De Luca OAM from the Office of The Hon Marie Ficarra MLC.

Ashley Leslie of Vincents Chartered Accountants presenting the Mock Creditors Meeting.

Nick Combis of Vincents, Carla Seirlis (President) and Karl Hill of Results Legal at QLD Breakfast.

From the PresidentIt is hard to believe National Conference was over a month ago and everyone I have spoken with since then thoroughly enjoyed their time at conference. Feedback about the parallel sessions was very encouraging with a lot of members saying they like this format as they are able to get to four different topics over the two days. Big congratulations to Brian Kay, Peter Mills and Greg Young as their sessions were well attended and extremely informative.

“How to Network responsibly” our October Network Night was a lot of fun and successful as everyone remembered to eat dinner and therefore network responsibly.

The last Credit Network Night for 2012 was held at Tattersalls and turned out to be a very interactive session run by Claire Williamson from AccountAbility one of our state sponsors. Feedback was very positive on the subject of “How to attract top performance and keep them”.

Our last event for the year is the State Christmas Party to be held at Tattersalls Club. The evening is a sit down dinner and we are privileged to have as our guest speaker the renowned ‘Gentleman’ of the industry for the evening, Mr Peter Laurens FICM.

Peter has been an AICM member for, out of courtesy to Peter let’s just say, a while so for him to share his years of experience and his knowledge of Credit Management, both here and in the USA, is going to be a wonderful time for us all.

To all of our members, both in Queensland and interstate, the Qld council would like to wish you all a very merry Christmas and a safe and prosperous New Year.

Please watch our web site as the activities for 2013 will be up in December and Qld council looks forward to welcoming you to our events in the new year. ➤

NSW Parliament Recognises Baz Sleiman NSW YCPA winnerOn Friday the 9th of November 2012, Baz Sleiman NSW YCP winner was recognised unanimously by all members of NSW Parliament for professional excellence and community involvement with credit and financial management in NSW. Baz has had previous experience working with local government and experience with community education projects.

One the day, The house formerly congratulated and recognised:(a) Mr Bassam ( Baz) Sleiman of PG Lion Resources Australia Pty Ltd

on winning the Institute of Credit Management’s NSW Young Professional of the Year award and excellence in credit and finance management, and

(b) the Australian Institute of Credit Management for inspiring and encouraging business people to achieve corporate excellence. (extract taken from Hansard, Office of Legislative Council Paper No.96)

Baz Sleiman will continue to be involved with the AICM council and will be a key figure and the voice for credit management in NSW for young business professionals within organisations.



queensland

New members Vicki Hopkins and Glenn Outhwaite with recertified CCE’s Elizabeth Morris and Mark Joubert.

Claire Williamson of AccountAbility presenting November CNN.

The Australian Institute of Credit Management Queensland welcomes the following organisations as our sponsors

for 2012



5th hole – D Myrteza, 14th hole – Peter Biazos. The men’s long drive winner was Ross Chapman and the ladies long drive winner was Donna Smith.

Special thanks must go to the event supporters, Wincollect – Naming Rights Supporter, VEDA – Drinks Cart Supporter, MacGillivrays – Hole Supporter, Welcome Gift Pack and Prize Donations, FTI Consulting – Hole Supporter, Vincents – Hole Supporter and Prize Donations, Robert Walters – Hole Supporter, QBE – Hole Supporter and Prize Donations, Dun & Bradstreet – Prize Donations, Ricoh Australia Pty Ltd – Prize Donations, National Collection Services – Prize Donations, and Patane Lawyers – Prize Donation.

The charity we supported on the day was Bravehearts. A special thanks to those who donated. In excess of $600.00 was raised for that worthy charity.

Special thanks also to all the participants and my co-ordinating committee members of Carla Serlis, Brian Kay and David Maczek.

I look forward to seeing you all next year at the National Conference Golf Day in Adelaide.

– Greg YoungChair AICM Golf Day (QLD) Organising Committee

AICM-Wincollect Golf Day, Hope Island Golf Links

TUESDAY 9 OCTOBER 2012 The beautiful Hope Island Golf Links was the venue for this year’s AICM National Conference Golf Day. It proved to be a tremendous success with favourable weather, the course presented in excellent condition, and hot competition.

A feature of this year’s event was the $10,000.00 hole in one prize on the par 3 third. Whilst a number of competitors went close, unfortunately, no one achieved the necessary miracle of a hole in one (from approximately 160 metres).

The winners of the 4 ball Ambrose event were the group from Vincents Chartered Accountants of Peter Biazos, Peter Levis, Peter Dinoris and Steve Wilkinson, with a fabulous score of net 54. The runners up were the Forbes Dowling Lawyers team consisting of D Myrteza, C McKerr, M Grant and D Smith, with a very respectable net 55.125. The NAGA Award was claimed by Colin McGee, Peter Mills and Simon Olsen with a net score of 79.

The winners of the nearest the pin prizes were 3rd hole – Terry Collins,

AICM-Wincollect golf day – Hope Island Golf Links.



south australia

From the President2012 is fast coming to a close. The year has been very successful for the South Australian Division, winning the President’s Challenge Trophy for the second year in a row and for the fourth time in five years as best performing division.

The year was a busy year and had plenty to offer for all members and their colleagues.

The year’s social network nights were popular and entertaining and the recent Lawn Bowls night in November a fun evening, while the Awards Dinner in July was a huge success attended by 107 people.

Our monthly credit focus workshops remained very popular throughout the year with excellent presenters and subjects. A regional seminar in March at Mt Gambier was well received by the local attendees who are keen for us to host another seminar in the near future. Thank you to all our presenters who gave their time throughout the year.

The National Conference at the Gold Coast was well attended by South Australia with about 25 members attending, and with Nick Pontikinas representing himself and the State proudly in the YCP by winning the National YCP Award.

I thank councillors for their efforts in 2012 and look forward to their support again in 2013. To all our members and associates who have attended network events and courses in 2012, my sincere thanks. I am sure you have gained valuable education and networking opportunities through your attendance.

I also thank our sponsors who supported us in 2012 (BRI Ferrier, Kemps, Veda, NCML, MCS Mercantile, Sinclair and Randstad), and look forward to your continued involvement in 2013.

As this is the last magazine issue for 2012 I would like to take the opportunity to wish everyone a Merry Christmas and a safe, happy New Year.

We look forward to 2013 with enthusiasm and confidence, and with the expectation of another successful year for the South Australian division.

– Trevor Goodwin – President SA Division, FICM CCE, FIPA, SA Fin

Credit Focus Sessions – September to November 2012Good attendances were a common factor of our final Credit Focus Sessions for 2012.

In September the topic, “Credit v Sales – Processes to bridge the gap” attracted not only Credit Managers, but a number of Sales Managers. The presentation by Adrian Stewart, Boral Group Credit Manager SA, and Felicity Hoff, Regional Sales Manager, Clay & Materials, was both, informative and entertaining. The importance and benefits of a company’s credit and sales departments working together, and incorporating good communication processes to assist in the collection of a company’s debts was reinforced throughout the presentation. Hearing a Sales Manager say “a sale is not a sale until the money is in the bank” is music to a Credit Manager’s ears.

October’s session on “The Art of Negotiation” was presented by Jane Calleja, Learning & Development Manager, National Credit Insurance (Brokers) Pty Ltd. Jane’s presentation involved considerable participation by attendees, and provided a number of techniques to use in communicating with not only debtors, but people in general. Practicing and mastering the techniques is an ongoing process which has beneficial outcomes, not only for your employer, but in your personal life.

“Ten essential things you need to know on insolvency” is the topic of our November session. Presenter, James Neate, Partner, Lynch Meyer, is a respected member of the institute, and one of our popular speakers. He traditionally attracts a cross section of the credit fraternity with his presentations, and the November session is no different, with excellent numbers attending for our final Credit Focus Session for 2012.

As this is the last report for 2012, I take this opportunity to thank all of our Speakers who have given their time and energy during the year. Thank you to our Sponsors for supporting Credit Focus sessions.

Adrian Stewart of Boral.

Credit Focus Jane Calleja of NCI with Bill Savas of Division Sponsor, Randstad.

➤



south australia

Franceen Pitcher, Ann Willkins, Trevor Goodwin and Gail Crowder.Nick Pontikinas being presented with the National YCPA trophy by Steve Brown, D&B.

To our members and non members; we trust you have been able to enhance your credit knowledge by attendance at our sessions, and trust you will take advantage of the 2013 program, when we will again feature a variety of topics to assist you in achieving positive outcomes.

– Lindsay Chuck

Twice is Nice!Congratulations to Nick Pontikinas on winning the National Young Credit Professional (YCP) of the Year Award for 2012 sponsored by D&B. Nick works at Boart Longyear as a Treasury & Accounts Receivable Officer and will complete his Bachelor of Commerce, Bachelor of Business (Applied Finance) degree through the University of South Australia in November. We thank Boart Longyear for supporting Nick and the YCP program.

This is the 2nd year in a row SA has won the trophy and we are very proud of Nick, who presented on the Eurozone Crisis.

We would also like to take this opportunity to encourage those under 30 and working in any area of credit to get involved in the

AICM events and consider applying for the YCP award for 2013. It is a great way to network, learn more about the credit industry and the YCP program is a great experience! It’s never too early to promote the YCP award to your workplace and colleagues.

– Maree Kairl, Chairperson YCP – SA Division

SA Networking EveningThe networking night, Oh my, what a night of all nights!

Sponsored by Sinclair Consulting, Daniel Jensen and his team provided all attendees with a take home goodie bag, filled with very useful information as well as bits and pieces (everyone loves a goodie bag). Sinclair also added to the night some light entertainment such as a business card raffle, door prizes and a lot more, Thank you…

With record numbers attending we took the opportunity for a different approach to the night and encouraged our members and



south australia

attendees to partake in our “Speed Mentoring”, Thank you kindly to our Mentors and councillors for their expert advice on a variety of subjects, such as CCE, study and online course incite, YCP (Young Credit Professionals) to name a few.

With the speed mentoring and our “Footy Fever” theme for the night, there was a lot of ‘speed’ talking and friendly footy banter. Go Crows! Go Port! (Just to cover all bases for those true blue participants in this field). Although our dress code for the night is business it was great to see quite a few coloured/team scarves and hats... Not really sure the style or fashion police would approve of the match up of skirts, suits and ties accessorised with the team colours!

The room was buzzing and it was great to see a lot of new and renewed faces where the Credit Professionals shared their experiences, stories and knowledge keeping the night moving at quite a pace. We held this very successful night on Thursday 20th September at

Members Enjoy the Networking Night.

Sam Turtle and Jessica McDonnell.

the Robin Hood Hotel (awarded the Best Metropolitan Bistro in Australia) where we also incorporated the recognition of SA’s newest members to which they were awarded with their certificates. Our new members included; Teresa Coccetti (Workcover Corp); Sam Turtle, Deanna Basso and Jacqueline Hadzic from NCI (Brokers) P/L. Congratulations and welcome to the AICM family from all your fellow credit professionals.

As 2012 is fast coming to an end, we are having our last event for the year being held on Friday 16th November... Get ready for another sensational evening of Lawn Bowls where each year the friendly competition and team rivalry heats up (you know who you are...) See you there!

The SA division would like to thank you our members, non-members and guests for making 2012 an amazing year and we cannot wait to see what 2013 has in store. So until next time we meet, please stay safe and have a great festive season!

– Lisa Anderson and Gail Crowder, SA Functions

The Australian Institute of Credit Management South Australia welcomes

the following organisations as our sponsors for 2012





victoria/tasmania

National Annual AICM YCP AwardsA big thank you to our very deserving state finalist Alison Said who represented Victoria/Tasmania Division in this year’s National Young Credit Professionals Awards sponsored by D&B, held at the National Conference in Surfers Paradise on 11 October 2012. Nick Pontikinas from South Australia took out the award. Being part of the YCP Awards is a valuable experience for any young credit professional looking for ways to gain credibility in the industry. We invite all Credit Managers to encourage their young staff to become involved in the program for the coming year. Please contact Louie Tzakopoulos and Alison Said if you are interested in entering one of your staff for this year’s awards.

Network Breakfast September 2012For something a little different for our Networking Event during this September a breakfast was held at the Parkview Hotel, instead of our usual evening event. Eddie Taylor from AccountAbility engaged the members and guests with a lively presentation on “Getting the Most Out of Your Staff”. As part of the presentation Eddie lead an interactive forum with tips and advice on how to get the best out of your staff. He covered key areas including; motivation, giving feedback and celebrating success. The forum included a group questions and an interactive demonstration.

October 2012 Half Day SeminarCOURT PROCESS AND PROCEEDINGSValuable knowledge for any credit professional, Tracey Rothwell, Nichola Rhyder and Lionel Wirth provided members with a fantastic insight into the goings on during the court process. A mock trial was run with participants provided the opportunity to be involved in actual trial process, and an insight into what it feels like to incur the wrath of a barrister whilst being cross examined. A fun and informative look at the court process and a valuable experience for all the members who took part on the day.

Eddie Taylor from AccountAbility presenting to members at the September 2012 Networking Breakfast.

From Left to right: Greg Kouwiloyan (Accountability), Carole McTavish (Orica), Charles Tims (AICM VIC/TAS).

Victorian finalist in YCP Awards Alison Said at the National Conference 11 October 2012.

The Australian Institute of Credit Management Victoria/Tasmania welcomes

the following organisations as our sponsors for 2012





victoria/tasmania

Prudence Chang (NCI), Tiffany Van Heythuyse (Heidelberg Australia), Vlad Espinoza (Veda), Soula Makrigiorgos (Veda), Carole McTavish (Orica), Lauren Crowe (McMahon Fearnley) at September’s Networking Breakfast.

Members enjoy the informative and lively court proceedings at the October Half Day Seminar.

S AICM will be conducting an extensive training and seminar program on the Privacy Reforms in 2013 S

The Government’s changes to the Privacy Act 1988 (Cth) (“Privacy Act”) which it is anticipated will come into operation in early 2013 will increase the obligations on business when collecting or dealing with personal information from potential customers and customers. As a result many of the current practices of business will not be compliant with the Privacy Act and will need to be amended. The reforms include the introduction of a single set of principles, the Australian Privacy Principles (“APP”) that will apply to businesses. Relevantly, the new Australian Privacy Principles are as follows:

z APP 1 – Open and transparent management of personal information – Requires your business to manage personal information transparently

z APP 2 – Anonymity and pseudonymity – Individuals must have the option of dealing with your business anonymously or through the use of an alias in relation to a particular matter

z APP 3 – Collection of solicited personal information – Applies to personal information solicited by your business

z APP 4 – Dealing with unsolicited information – Where your business receives personal information and your business did not solicit the information, your business, within a reasonable period of time determine whether or not it could have collected the information under APP 3 if the information had been solicited by the entity

z APP 5 – Notification of collection of personal information – When your business is collecting personal information it must notify or make individuals from whom it is collecting information aware that it is doing so

z APP 6 – Use and disclosure of personal information – If your business holds personal information about an individual that was collected for a particular purpose, the entity must not use or disclose it for another purpose

z APP 7 – Direct marketing – An organisation that holds personal

information about an individual must not use or disclose the information for the purpose of direct marketing

z APP 8 – Cross-border disclosure of personal information – Before your business discloses personal information about an individual to an overseas recipient, it must take such steps as are as reasonable in the circumstances to ensure that the overseas recipient does not breach the APPs (other than APP 1) in relation to the information

z APP 9 – Adoption, use or disclosure of government related identifiers – Provides that an organisation must not adopt a government related identifier of an individual as its own identifier of the individual unless this is required or authorised by or under Australian law or a court order

z APP 10 – Quality of personal information – Requires your business to take reasonable steps to ensure that personal information that is collected, used or disclosed is accurate, up-to-date and complete and relevant

z APP 11 – Security of information – Your business must take reasonable steps to protect personal information that it holds from misuse, interference, loss and unauthorised access, modification or disclosure

z APP 12 – Access to personal information – If your business holds personal information about an individual it must, on request by that individual, give the individual access to the personal information

z APP 13 – Correction of personal information –Your business must take reasonable steps to correct personal information that it holds to ensure that, having regard to the purpose for which the information is held, it is accurate, up-to-date, complete, relevant and not misleading where the individual whom the information is about requests the entity to correct the information

To prepare for the changes it is suggested that Credit Mangers and their businesses review whether their internal process of handling personal information is in accordance with the Privacy Act.

LEARNED LEGAL CORNER

Privacy Reforms will impact on the way Credit Managers do business!

November’s Legal Update Provided by: MCMAHON FEARNLEY LAWYERS PTY LTD



western australia/nt

From the PresidentAs I write this final report for the 2012 year I am reminding myself of just how ‘busy’ the year has been both personally and with the Institute. Where has the time gone?? I cannot let the opportunity go by without saying a few thank you’s and leaving you with some brief words of wisdom.

Firstly the Thank You’s…I run the risk of missing somebody but hey I’ll try my best not to. First and foremost it is you the members; without you we would not have the purpose or the drive to do the things we (the Council) do. Next are the sponsors whose generosity has not gone unnoticed and is very much appreciated; My colleagues on the WA Council are next, especially the Executive team in Raffaele Di Renzo and Byron Savage and my fellow Councillors, who have all contributed to the years agenda (Some contributed more than others but we are not perfect and there is room for us all to improve in 2013)

Some special thanks goes to Frank Vredenbregt, Evan Verge, Kevin Allen, Steve Thomas and Mike Murphy for their support and guidance.

Last but not least I would like to single out our WA Executive Officer, Ron Adams. Now…. Ron does not always agree with me or the Council but he is definitely our ‘conscience’ and he always delivers a reality check just when we need it. Many thanks Ron for all your hard work. I look forward to working with you in the new year.

In conclusion I would like to acknowledge the tireless efforts of the team at AICM Head Office.

Finally I wish all of you a very Merry Christmas and festive season. Enjoy this special time of year in which ever way you do.

Final words of wisdom for 2012 are: “There is nothing more magnetic than an untrained smile”. Cheers all,

– Colin Phillis MICM, , President – WA Division

National Young Credit Professional Awards 2012The Young Credit Professional Awards sponsored by D&B are over for another year. Kristy returned from the National YCP on the Gold Coast but alas was unsuccessful in her tilt at the National Championship. We thank her for her time, dedication and effort to challenge for the title.

A word from Kristy – 2012 WA NYCP Finalist

I had an amazing time at the conference in QLD, easily one of the best weeks of my life and career. After a lovely flight with a stop-over in Sydney where I had never been before (thank you D&B & AICM!),

the week started with the 5 YCP finalists from each state meeting briefly on the Monday night, followed by a nerve wracking Tuesday where we each completed our interviews and presentations. I was the last one to present, and think I had a better grasp this year on what the judges are looking for and how to help the WA 2013 candidate take it out!

After walking out of the judging room, the relief for each of us was immense, and the celebratory atmosphere really kicked in! The hotel itself was absolutely stunning, with multiple pool and spa areas where people would bump into each other throughout the week. We finalists met up for dinner and the delicious buffet breakfast, to compare what we did, how we answered certain questions, what we are doing for Credit and for young people in our states, our career plans etc. They were a great bunch that I had such a good time with, and we are really excited to keep in touch, and to work together as a YCP Sub Committee on rolling out Social Media and additional events and networking opportunities, and how to continue to add further value to AICM members.

Aside from the YCP competition itself, I got to brush shoulders with over 400 credit professionals, many of whom were in varying and inspiring roles in the industry. As part of my state prize I had the privilege of attending the 3 day AICM conference at no charge – so I attended informative sessions all week, got to build on my knowledge and connections from last year, and really got some ideas on my career development and direction! The Award Night itself on the Thursday was an absolute blast, with a New Zealand band playing many classics us Aussies have claimed as our own. There was a lot of dancing, sweating and laughing, and even some ‘gangnam style’ moves to finish the evening! Some of us gluttons for punishment carried on the party out on the town, and I am proud to say I made it back alive and well be for the 8.30am session! Next years conference will be in SA and therefore more affordable than usual for WA to attend, and I will 100% be there supporting our 2013 YCP.

– Kristy Shrigley MICM, WA Young Credit Professional

Ian Francis and Michael Miller

Kristy Shrigley

Colin Phillis, Frank Vredenbregt and Simon Read.



western australia/nt

Western Australian Breakfast Seminars

THE INVISIBLE CREDITORTaylor Woodings Insolvency Insights publication highlights an increase in corporate collapses. In most corporate collapses the Australian Taxation Office(ATO) is a creditor. The enforcement powers of ATO have recently been strengthened.

Ian discussed the recent changes made to the Taxation Administration Act, insolvency statistics and what proactive steps credit providers should be undertaking.

GUEST SPEAKER: Ian Francis, TaylorWoodingsIan has extensive corporate advisory and corporate restructuring

experience advising clients across a diverse range of industries including property and construction, retail, property, hospitality and agriculture. Ian has strong working relationships with large retail banks, accounting firms, major law firms, large public companies and government agencies. Ian is the lead Partner for the Perth office of Taylor Woodings.

Ian is committed to his profession and was a board member of the WA State Committee of the Insolvency Practitioners Association for 13 years and was national board member for three years. It was an enlightening talk and we thank Ian Frances for presenting for the AICM WA on this occasion.

PPSR REVISTED - 9 MONTHS ONThe Personal Properties Securities Register has been in operation for 9 months. Many people still don’t know of it, or are unaware of the ramifications of the legislation. This presentation gave a brief overview of the legislation and look at the few examples of case law we have had in Australia. It also looked at common mistakes in registrations and misconceptions that experience has revealed over the short time we have been under the PPS regime.

GUEST SPEAKER: Frank Vredenbregt- AHG Group LtdFrank Vredenbregt is the current National President of the AICM. He

has held various roles in the AICM since joining the WA Division council 21 years ago. He worked in the finance industry for 15 years before moving to the general commercial area 25 years ago. He is currently the Group Credit Manager of Automotive Holdings Group Limited. Frank is a Fellow of the Institute of Public Accountants and a CCE Member of the AICM. He has studied the PPS legislation since it was in Bill form and well qualified to give this presentation.

Simon Read Presenting.Invisable Creditor Seminar.

GUEST SPEAKER: Simon Read – Vantage Performance WASimon is a registered insolvency practitioner and a director

of Vantage Performance WA, providing advice to top businesses and boards on a broad range of business matters with focus on performance improvement and turn around management including finance and banking relationships. He also runs EDX(WA), a provider of specialist advice and registration services in respect to the PPS Act, and is well versed in the PPS legislation. A very topical subject being there were many questions during and at question time of the talk and we thank Frank and Simon for presenting on the subject for the AICM WA membership.

– Warren Myers MICM, Media and Publications

The Australian Institute of Credit Management Western Australia/NT

welcomes the following organisations as our sponsors for 2012



aicma r o u n d t h e s t a t e snew members


QueenslandRoss Cabban A.P.V.C. Finance LtdWayne Clark Building Industry Credit BureauVicki Hopkins Optimum RecoveriesGlenn Outhwaite Moore Stephens (Queensland) LtdJuliet Smith TollLeslie Venville Archibald & Brown LawyersTrevor Wulfse Light Leasing Pty Ltd

New South WalesLinda Boulom UNSWNorma Boutros Temperzone Australia Pty LtdKatrina Clarke Steven Davies Bibby Financial Services AustrJesse Harris Onguard Australia Pty LtdGirlie Javier Integral CollectionsLucinda Kelt Integral CollectionsKevin Mcdonald CSC Australia Pty LtdTracey Mcilvenny PPG IndustriesJoy-Anne Meehan Boral LtdMaria Miguel Integral CollectionsDianne Mitchell Burridge Harris & FlynnNicole O’neill Integral CollectionsStuart Prendergast National Credit Insurance (Brokers)Helen Raffin Atlantis Pty LtdLisa Westerlaken Fuji Xerox Australia Pty Ltd

Victoria/TasmaniaDavid Bean Visy RecyclingKaye Bensch Visy IndustriesSusanne Douglas Wridgways Pty LtdRebecca Fahey MRB LawyersLemona Haitidis Visy Board Pty LtdLiam Johnstone Integral CollectionsMahipal Kawar Visy Board Pty LtdRobert Savage JHK LegalDane Sisic Profssional Collection ServiceBrack Thompson CSC Australia Pty LimitedMark Wenn Mills Oakley Lawyers

South AustraliaDeanna Basso NCI (Brokers) Pty LtdNatasha Cocks NCI (Brokers) Pty LtdAmity Garland NCI (Brokers) Pty LtdEdward Griffith Ferrier HodgsonJacqueline Hadzic NCI (Brokers) Pty LtdSharon Harrington NCI (Brokers) Pty LtdRachel Rankin NCI (Brokers) Pty LtdRadek Tatowicz NCI (Brokers) Pty LtdSandra Van Bruinessen NCI (Brokers) Pty Ltd

Western AustraliaMark Buckland Integral CollectionsJohn Hodges Fuji Xerox Australia Pty Ltd

NEW MEMBERS

The Institute welcomes the following credit professionals who were recently admitted to membership in September and October 2012.

1. The AICM Annual General Meeting of 11 October 2012 passed the following amendment to Article 18 i) By deleting Article 18 (i) and inserting the following words in Article 18 (i)The Vice President will hold office for a two-year term. Upon the expiration of that term, the Vice President is eligible for re-election for a further two-year term, but will serve for no more than 6 consecutive years on the Board. However a Director may seek nomination to the position of Vice President and if so elected may serve that 2 year term notwithstanding that this term may exceed 6 years as a Director. No one may hold the office of Vice President for more than two consecutive terms

COMMENT. The new words are in bold. The proposed amendments are intended to afford the same conditions to the Vice President as the President

2. The Meeting of AICM Board of Directors 8 October 2012 reviewed the election process at Division Council level and resolved to make the following amendments to the By Laws.

By-Law 5 a) – ELECTION of OFFICERS was amended from the following; a) A Notice calling for Nominations to a Division Council

in a format approved by the relevant Division Council must be circulated to members at least forty-five days prior to the Division annual general meeting.

To the following;a) A Notice calling for Nominations to a Division

Council in a format approved by the relevant Division Council must be circulated to members at least forty-five days prior to the Division annual general meeting which must be held no later than 31 July of each year.

By-Law 5 c) - ELECTION of OFFICERS was amended from the following;c) The Division Council at its first meeting following

the Division annual general meeting, which must be held no later than 31 July of each year, elect a Division President and a Vice President for a term of one year who take office as from the end of that meeting.

To the following;c) The Division Council at its first meeting following

the Division annual general meeting, which must be held no later than 31 August of each year, elect a Division President and a Vice President for a term of one year who take office as from the end of that meeting.

By-Law 10 was amended from the following; GENERAL MEETINGSThe business of a Division annual general meeting is:a) To confirm the minutes of the previous meetingb) To elect and or confirm Councillors as members

of the Division Council from a list of eligible nominations in accordance with the articles of association and by-laws.

The procedure to be adopted by Division Councils in conducting a Division general meeting will follow as closely as possible the procedure contained in articles 36 c) – 49.

To the following;GENERAL MEETINGSThe business of a Division annual general meeting is:a) To confirm the minutes of the previous meeting,b) To elect and or confirm Councillors as members

of the Division Council from a list of eligible nominations in accordance with the articles of association and by-laws.

The procedure to be adopted by Division Councils in conducting a Division general meeting will follow as closely as possible the procedure contained in articles 33 – 48.

By-Law 1 was amended from the following;Subject to article 19 of the articles of association, a numbered schedule of bylaws will be maintained from the 6th day of June 2000.

To the following;Subject to article 23 of the articles of association, a numbered schedule of bylaws will be maintained from the 6th day of June 2000.

AMENDMENTS TO AICM CONSTITUTION

Optimizing working capital by creating a better insight.

Insight into the relationship with your client is vital

and will lead to tangible results in reducing the costs

of your working capital. Customer intimacy results

in mutual understanding and better financial and

operational results. A better result is just a matter of the

right approach: get closer to your customer and optimize

your working capital. When will you start getting new

insights? OnGuard. A decent way of doing business.W W W. O N G U A R D . C O M

Adv 210 x 297_Kijkertje_UK.indd 1 21-06-12 14:20

Know the people behind the business

To find out more about how you can get the complete picture behind a business, call 1300 736 133 or visit veda.com.au

As Australia’s leading credit bureau, Veda is able to provide you with unique credit insights by combining data on individuals with businesses. By using the new Trading History reports, you will get:

• A detailed view of the credit enquiry history of an organisation, its directors or proprietors and their other business interests as held on the Veda bureau

• A new credit risk score that shows the likelihood of default and adverse events being recorded on the Veda bureau in the next 12 months

• A new easy to read design with summary pages so you can find the information you need faster

Make faster, reliable credit decisions with Veda’s new scored Trading History

Did you know: • The lowest scoring 5% of customers are up

to 9 times more likely to default than average

• The highest scoring 20% of customers are up to 9 times less likely to default than average

• 65% of company failures had no previous adverse at point of enquiry and yet Veda’s new Trading History score can identify 73% of company failures in the bottom 20% of the scored Veda bureau population

wishing you all a merry christmas and a happy new year - aicm · 2016-03-14 · regardless of your...

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