Legislation and Compliance

Real Estate Institute of New South Wales 30-32 Wentworth Ave Sydney 2000

Phone (02) 9264 2343 Email [email protected] Web www.reinsw.com.au

Assistant Agents Course Learner G

uide Legislation and Compliance

mailto:[email protected]

© REINSW Legislation and Compliance Cluster Learner Guide v1.1 January 2020 Page 1

© REINSW Legislation and Compliance Learner Guide v2 February 2021 Page 1

Introduction .................................................................................................... 3

Law Definition .............................................................................................. 4

Common Law ............................................................................................. 4

Common law principles ............................................................................... 5

Other categories of Law ............................................................................... 7

Why legislation is needed ............................................................................... 8

Simplification of legislation ........................................................................... 10

Drafting of legislation ................................................................................ 10

Interpreting legislation ................................................................................. 11

How law is made ...................................................................................... 11

Progress of a Bill ...................................................................................... 12

Acts and Regulations ................................................................................... 14

Role of Regulators ......................................................................................... 16

Understanding the framework of an Act ............................................................. 16

Interpretation of Legislation ............................................................................ 23

State and Territory Laws .............................................................................. 27

Relevant Commonwealth Legislation .............................................................. 28

Legislative changes ................................................................................... 30

Agency responsibilities ................................................................................... 32

Compliance with industry codes ..................................................................... 36

Rules of Conduct ......................................................................................... 37

Breaches of the Rules of Conduct ................................................................ 37

Penalties and Personal Liability ................................................................... 37

The importance of keeping up to date with Legislation ...................................... 39

Discrepancies between agency practice and personal practice ............................ 41

The purpose of trust accounts .......................................................................... 42

Types of real estate trust accounts and trust money ......................................... 43

Property Management ............................................................................... 43

Property Sales ......................................................................................... 43

Legislation .............................................................................................. 43

Roles and responsibilities ................................................................................ 44

Licensee in Charge ................................................................................... 44

Your role ................................................................................................. 44


Operation of the trust account ....................................................................... 45

Opening and closing trust accounts ............................................................. 46

Computerised trust accounts ...................................................................... 47

Security and integrity of trust account ......................................................... 48

Trust account audit ................................................................................... 48

Trust account discrepancies ....................................................................... 49

Trust Accounting Cycle .............................................................................. 50

Receipts for trust money ........................................................................... 51

Banking of trust money ............................................................................. 52

Disbursement (payments) from the Trust Account ......................................... 52

Payment of trust money ............................................................................ 52

Cashbook ................................................................................................ 54

Ledger Accounts ....................................................................................... 54

Balancing and reconciling trust account ........................................................ 55

Bank reconciliation ................................................................................... 55

Trial balance ............................................................................................ 55

End of Month Processes Property Management .............................................. 55

Annexure 1 Application of legislation in agency ................................................... 58

Sales procedures ........................................................................................ 58

Property management procedures ................................................................. 63

Annexure 2 Trust Account ............................................................................... 67

Glossary of Terms .......................................................................................... 77


Introduction

To start working in real estate you will need a certificate of registration.

Successful completion of the REINSW Assistant Agents Course will not only enable you

to apply for registration with NSW Fair Trading but will also equip you with the skills

and knowledge to be work ready.

The Legislation and Compliance Cluster will give you a broad understanding of the

legislative framework that is relevant to real estate.

You will develop an understanding of the structure, application and impact of

legislation on work in real estate.

You will also gain a basic understanding of trust accounts and the requirements of

working with an agency trust account.

Throughout the learner guide you will find references to legislation, you are

encouraged to access the particular sections of Acts or Regulations via the internet,

this will ensure that you are reading the most up to date version.

You can access all legislation on www.austlii.edu.au or go to NSW Fair Trading for New

South Wales legislation.

This learner guide has been developed to support your learning but should not be

relied upon as the total information source to complete this cluster. Further research is

required.

Suggested websites include:

• NSW Fair Trading

• Australian Legal Institute

• Federal Register of Legislation

• Real Estate Institute of NSW

• NSW Civil and Administrative Tribunal

• Tenants NSW

Enjoy your learning. You can access help or guidance by contacting our Customer

Service Team on (02) 9264 2343 or email [email protected]

http://www.austlii.edu.au/

mailto:[email protected]


Law Definition

Law can be defined as a statute, ordinance or regulation enacted by the legislative

branch of a government and signed into law, or in some nations created by decree

without any democratic process.

This is distinguished from "natural law," which is not based on statute, but on alleged

common understanding of what is right and proper (often based on moral and religious

precepts as well as common understanding of fairness and justice).

Law is also a generic term for anybody of regulations for conduct, including specialised

rules (military law), moral conduct under various religions and for organisations,

usually called "bylaws."

Generally, there are two types of laws:

Statute law which are laws made by Parliament (all crimes and some civil matters fall

under statute law)

Common law which is inherited law that is not written down as legislation but is

recorded as case law (which comes from judges' decisions in particular cases, both

criminal and civil)

Statute Law (Legislation)

Statute laws start out as Bills, or proposals, that are voted on by Parliament. If the

majority of members vote yes, then, after royal assent, the Bill becomes law and is

known as an Act of Parliament (such as the Property and Stock Act Agents 2002).

Anyone accused of a crime, even if it is only a traffic offence, must be charged under

an Act of Parliament; that is, with breaking a statute law.

Statute law includes Acts of parliament and delegated legislation. Various terms are

used to describe such delegated legislation, e.g. regulations, orders, statutory rules,

by-laws and ordinances.

The actual form of the legislation will depend on the directions, if any, contained in the

parent Act. Regulations are usually published in the appropriate government gazette

though again the form of the publication may be controlled by directions contained in

the parent or enabling Act.

Common Law

Common law is harder to define. The term comes from England, where it originally

meant law common to the whole realm, rather than local, customary law. Australia


inherited the English common-law tradition, but it is not written down as a particular

body of law.

Instead it is used as a concept covering all accepted principles that arise from the

history of actual cases. So, if a particular common law was queried, in practice it is a

referral to case law.

It is important to understand the legal framework in which you operate and know the

difference between common law and statute law.

Again, common law is the body of law made up of judicial opinions and precedents and

is made by Judges. Statute law is legislation and statutes made by Parliament.

Both types of law influence the real estate industry.

Common law principles

In common law there are some basic principles that bestow rights and obligations on

citizens. These all have some kind of impact on your work in the property industry.

Some of the common law principles that affect us in our day to day duties include:

Life

The right to life is the fundamental right, from which all other rights flow. The right to

life means that you can’t endanger someone or force a person to do anything unless

you have a lawful reason.

Liberty

The right to liberty means that everyone has a right to liberty. This means that no one

can be unlawfully detained.


Freedom of action

Freedom of action means that a person:

Can act as they wish unless there is a law that prohibits that action

Cannot be required to do something unless there is a law that compels them to do this

Use and enjoyment of personal property

Everyone is entitled to own property and use their property as they wish, unless they

are breaking a law. Because of this right, property managers for example should be

very cautious in seizing property.

Privacy

Everyone has the right to privacy in his or her own home or premises. No one can

enter a home or premises without the occupier’s consent or a legal injunction. As a real

estate agent in any sector or capacity you have no right to enter someone’s house or

business without the consent of the owner or occupier.

Interaction of statute law and common law

Parliament can make its own laws and if it does not like what the court does, it can

make changes. Statute law can improve common law by

Declaring parts of the common law, Supplementing the common law and Rectifying the

common law.

Statute law overrides common law if there is a conflict.


Other categories of Law

These can include but aren’t limited to:

Equity Law

In law, the term "equity" refers to a particular set of remedies and associated

procedures involved with civil law. These equitable doctrines and procedures are

distinguished from "legal" ones. A court will typically award equitable remedies when a

legal remedy is insufficient or inadequate. This is entirely at the discretion of the court.

Contract Law

The primary purpose of contract law is to enforce the agreement of the parties. For

there to be a contract, substantial agreement must exist and the parties must have

freely intended to be legally bound. In interpreting contracts, courts are primarily

trying to carry out the intent of the parties.

The role of Judges

As previously discussed, legislation is written against the background of the common

law. The common law is the law that exists apart from legislation.

The common law emerged from the history of the United Kingdom and did not rely on

laws made by Parliament for its existence. The common law is commonly referred to as

judge made law because it is found in decisions of judges on particular cases brought

before them.

However, generally speaking, the contemporary role of a judge is essentially to declare

the existing common law, not to make new law.

In Australia, only Parliament may make legislation or authorise the making of

legislation. However, because judges have the role of applying the laws of

interpretation, if there is a dispute about the meaning of legislation, the judges decide

the dispute.


Why legislation is needed

Legislation is a more efficient method of changing laws to meet modern day

requirements. It is easier to change a law via parliamentary legislation than through

the common law court system.

Under the common law, a person may obtain rights or be subject to obligations

because of a particular legal relationship with another person (eg: contracts)

The relationship may arise because of agreement or because of a document made by a

person conferring a power over the person’s property on another person (eg: Power of

Attorney)

Relationship with the Australian Constitution

The Australian Constitution is the supreme law under which the government of the

Commonwealth of Australia operates, including its relationship to the States of

Australia. It consists of several documents. The most important is the ‘Constitution of

the Commonwealth of Australia’ The Constitution was approved in a series of

referendums held over 1893-1900 by people of the Australian colonies, and the

approved draft was enacted as a section of the Commonwealth of Australian

Constitution Act 1900.

Under the Australian Constitution only the Commonwealth (federal) Parliament may

make laws about a particular set of matters. Some of these matters include those

related to: External Affairs, Taxation, Defence, Quarantine and Currency.

It is important to understand that if the Commonwealth Parliament makes a law, this

law overrides a State/Territory law on the same matter, and the relevant

State/Territory law is invalid to the extent it is inconsistent with the Commonwealth

law.

The Australian Constitution was intended to provide a framework for the operation of

national government.

It was not drafted as a guarantee of citizens’ rights; it contains very little by way of

rights. Australia has no constitutional guarantee of equality (except on the ground of

State of residence), and no 'Bill of Rights’.


The Constitution created two levels of government, Commonwealth and State (local

government is not recognised in the Constitution). The Constitution sets out the

powers of the Commonwealth Government, so that any power to make laws must be

found in the Constitution. For example, in the area of anti- discrimination law there are

four principal Commonwealth anti-discrimination laws:

• Racial Discrimination Act 1975 (C’th)

• Sex Discrimination Act 1984 (C’th)

• Disability Discrimination Act 1992 (C’th) and

• Human Rights and Equal Opportunity Commission Act 1986 (C’th)


Simplification of legislation

Simplification of legislation is a key strategy for increasing the understanding of the

law. Laws should be clear and unambiguous so that people are able to determine how

their rights and obligations are affected, without needing to rely on the legal

profession.

Simplification of legislation will improve access to the law by reducing the need for

legal interpretation and reducing dependence on the legal profession.

It also will reduce costs as better understanding of laws leads to a greater level of

compliance and less litigation focusing on the meaning of unclear laws.

Drafting of legislation

Clear and unambiguous legislation will make laws easier to understand and easier to

access. Careful drafting of Acts of Parliament and delegated legislation is required to

ensure easy access.

Government drafting agencies now make a concerted effort to use a `Plain English'

style of drafting. This involves the use of simple language, flow charts, and readers'

guides designed to make legislation easier to follow.

Further improvements will be made by using Schedules and tables, rewriting drafting

handbooks, clarifying when material should be in Acts or other legislation, and testing

draft legislation in appropriate cases.


Interpreting legislation

Interpreting legislation can play a fundamental role in promoting desirable features in

legislation, such as brevity and consistency.

It can promote legislation that is easy to read and can be a useful repository for

standard definitions and provisions and can prescribe general rules for the construction

of legislation and the conduct of administration.

How law is made

There are three levels of government:

• Commonwealth (another name for Commonwealth)

• State/Territory and

• Local (councils).

All levels of government institute the making of laws, by-laws and regulations. In many

states – for example in NSW the Parliament can make and change laws and the

government can initiate the making of ‘rules’ to regulate those laws.

The Parliament of NSW is made up of the Governor (the Queen’s representative) and

the Legislative Assembly (all the members of the Parliament).

The Governor acts on the advice of the ministers, who are members of the government

appointed by the Premier to take charge of various government departments. The

Governor can ignore this advice and act on their own behalf but this is very rare.

Ministers belong to State Cabinet and each is responsible for one or more government

department/s. Ministers also have the responsibility to implement regulations.

For example, the Minister for Industrial Relations is responsible for the NSW Annual

Holidays Act 1944 and can grant a holiday for a school or group of schools in a

particular area at any time. He does not have to get approval from Parliament to do

this because his right to do so is ‘built in’ to the Act. He would not use this right

normally without approval of the Minister for Education.

However, there are various Acts that Parliament has passed which make sure that

government departments carry out their business in a proper manner and do not

abuse their power.

New laws are introduced, and old ones changed or thrown out for a number of reasons.

For example, the people may elect a new government, which means Parliament is

suddenly controlled by a party with different ideas on many matters. A new Parliament


will probably make many new laws, often as a result of promises that the new

government members made to the people just before the election.

Even without a change of government, a minister may be persuaded by public opinion

to introduce a new law or change an existing one.

Progress of a Bill

A Bill is considered by Parliament in a number of stages, called "readings". The main

Parliamentary debate on a Bill takes place at the second reading stage. The speeches

and debate at this stage often provide useful summaries of the Act and the reason for

its introduction. These speeches may are located in the parliamentary debates (called

Hansards).

Following the second reading debate, the Bill may be referred to a committee or

considered by the whole house sitting as a committee. Either of these "committee

stages" considers and debates the details of the Bill.

After passing the committee stage (or the second reading stage if there is no

committee stage) the Bill is then "read a third time"; that is, the Bill's title is again

read aloud in Parliament.

The Bill has then passed this house. In all parliaments with two houses (e.g. Australia,

but not Queensland) the Bill must then go through all these stages in the other house.

If the second house makes changes to the Bill, it will be reconsidered by the house

that first passed it.

Not until both houses have passed the same version of the Bill can it go on to the next

stage, Royal Assent. The monarch (in the U.K.), or her representative (e.g., Governor

for Australian states, Governor-General for Australia) assents to the Bill which then

becomes an Act.


Updating or “Noting Up" an Act of Parliament

When researching an Act of parliament, it is generally essential to ensure to obtain the

most current version of that Act. It is therefore necessary to check whether the Act, or

any parts of it, have been repealed or amended since it was passed. If a reprint of the

Act is available, it is best to commence with this, noting carefully the date on which the

Act was reprinted.

Subordinate legislation

Subordinate or delegated legislation is legislation created by a body to which

Parliament has delegated authority to do so. Examples would include government

departments such as Social Services, local councils, Fair Trading NSW. It includes

regulations, statutory rules, by-laws and "instruments" such as proclamations.

Commonwealth subordinate legislation

Commonwealth regulations are located at: www.austlii.edu.au/au/legis/cth/num_reg

Like Acts, regulations may be reprinted, incorporating amendments made up to the

date of reprint. Regulations can also be found on the internet by simply typing in the

name of the regulation that you want – for example Property Stock and Business

Regulations or can be located at: www.legislation.nsw.gov.au

http://www.austlii.edu.au/au/legis/cth/num_reg

http://www.legislation.nsw.gov.au/


Acts and Regulations

Acts and Regulations are quite different and it can be confusing knowing which is

required as they often have similar titles and obviously deal with the same subject.

An ACT is legislation passed by the Parliament. Acts, (not including Schedules to Acts)

can only be amended by another Act of Parliament. Acts set out the broad legal/policy

principles.

REGULATIONS, RULES, CODES etc. are commonly known as "subsidiary legislation"

and require publishing in the Government Gazette to become legal. These are the

guidelines that dictate how the provisions of the Act are applied. They may also contain

pro forma official forms that are required under the Act. Regulations and schedules to

Acts can only be amended by a notice published in the Government Gazette (found on

legislation.nsw.gov.au)

Generally, if it’s the legal/statement of Law that you want, then it is the Act that is

required. If it is implementation detail, then the Regulation is required.

An Act does not become part of the law until it comes into force or is proclaimed to

commence.

Details of when an Act will come into force appear in the Act itself. Unless otherwise

indicated Commonwealth Acts come into force 28 days after assent.

Notice of assent appears in the government gazette. When an Act comes into force on

a date to be fixed by proclamation, the date will be published in the appropriate

government gazette. When Acts have received the Royal Assent, they are given a

number.

Australian Acts and those of Australian states now have a simple consecutive number

including the year of their passage (.e.g., Number 10, 1989). The number is an

important part of the identification of the Act since each Act has two titles, a long one

and a short one, and different Acts may have the same title.

Amendment

An amendment to a Bill, proposed during the committee stage of the Bill is for omitting

words from, or inserting words in, the Bill.

Schedules

A common use of schedules is to specify detailed provisions for the overall correct

working of the Act.


Schedules are subsidiary to the main purpose of the Act, such as forms, the names of

repealed Acts, and formal amendments. There are no rules governing the content of a

schedule.

Mandatory codes of practice

Prescribed mandatory codes provide a set of rules or minimum standards for an

industry, including the relationship between industry participants or their customers.


Role of Regulators

NSW Fair Trading

Legislation covering the operations of the property services industry is administered by

NSW Fair Trading who administer the act and all the legislative requirements.

Their primary role is to manage consumer laws and to look after the rights of

consumers and to achieve fairness for all in the marketplace. Informing consumers and

traders on their rights and responsibilities is an essential ingredient of a fair

marketplace.

Australian Competition and Consumer Commission (ACCC)

The ACCC promotes competition and fair trade in the marketplace to benefit

consumers, businesses and the community. It also regulates national infrastructure

services. Its primary responsibility is to ensure that individuals and businesses comply

with the Commonwealth competition, fair trading and consumer protection laws.

Australian Securities and Investments Commission (ASIC)

ASIC is Australia’s corporate, markets and financial services regulator.

They contribute to Australia’s economic reputation and wellbeing by ensuring that

Australia’s financial markets are fair and transparent, supported by confident and

informed investors and consumers.

They are an independent Commonwealth Government body, set up under and

administer the Australian Securities and Investments Commission Act (ASIC Act), and

we carry out most of our work under the Corporations Act.

Enforcement and penalties

Each state has an agency that will be responsible for the administration and

enforcement of real estate legislation. The regulator has the power to prosecute agents

and agency’s for breaches to the Act and Regulations. The enforcement powers of the

regulator are very broad and if a breach of legislation has occurred the regulator has

the power to revoke licenses and certificates, impose fines or conditions and to

recommend that criminal action be undertaken, especially in case of trust account

fraud.

Understanding the framework of an Act

Plain English


Plain English involves the deliberate use of simplicity to achieve clear, effective

communication and is commonly considered to be the best technique for effective

communication in legislation.

The plain English approach to legislation is based on the idea that laws should be as

simple as possible so that the ordinary person in the community can understand them.

A law that is easy to understand is less likely to result in dispute.

Plain English does not involve the simplification of a law to the point it becomes legally

uncertain. In particular, care needs to be taken that legal uncertainty is not created

when dispensing with terms having established meanings for users of legislation.

Plain English may involve a balance of simplicity and legal certainty to ensure the law

is both easily read and understood and legally effective to achieve the desired policy

objectives.

Title

An Act is identified by a long title which, in brief terms, describes the purposes of the

legislation for example:

“An Act to provide for the regulation of property, stock and business agents; to repeal

The Property, Stock and Business Agents Act 1941; and for other purposes”.

For convenience, the Long Title is compressed into a short title, allowing easier

recognition of the latter, e.g. Property and Stock Agents Act 2002


Long Title

The term long title refers to the words appearing at the start of an Act, before the

formal words that describe briefly the main body of legislation that contains the clauses

that state what the law requires.

The long title is the first of the elements of an Act that can be used to determine the

meaning of that Act, and generally the scope of the Act. It can be used to remove

ambiguity by establishing the purpose for which the statute was enacted.

The long title may be referred to as an aid to the construction of the Act.

Short Title

The term short title refers to the short name given to a Bill or Act, usually by its first

clause or section, consisting of a name and the year of enactment, e.g.

Property and Stock Agents Act 2002 No. 66

NSW Acts are numbered in chronological order, commencing with the number 1, for

each calendar year.

Preamble/Table of Provisions

Formerly, some Acts had a preamble which is a preliminary statement usually setting

out the reasons for making the Act and the scope of the Act. They are rarely used in

modern day Acts, however modern Acts usually begin with a ‘Table of Provisions’ (a

kind of index) which provides an aid to reading.

Heading, Sections and Subsections

As a matter of convenience, Acts are divided into numbered sections. A section

contains one main idea and may be subdivided into subsections. A subsection is

denoted as a number within brackets.

The sections are numbered consecutively and generally the numbering commences at

the beginning of the Act and continues in an unbroken sequence until the end of the

Act.

The fact that an Act is set out in sections, subsections and paragraphs is a matter of

convenience; but its only legal effect arises if there is a conflict between two sections

in the same Act.

Paragraphs


The subsections may themselves be divided into smaller segments which are known as

paragraphs. A paragraph is denoted by a numeral or letter of the alphabet within

brackets.

The following example is of a section divided into two subsections, one of which is then

divided into 2 paragraphs:

Part 3 > Division 4 > Section 48

48 Duty not to act for both buyer and seller of land

A licensee must not act in his or her capacity as licensee on behalf of both the buyer

and the seller of land at the same time.

A licensee must not enter into agency agreements in respect of the purchase or sale of

land if the performance of services by the licensee under the agreements will or can

result in the licensee acting in his or her capacity as licensee on behalf of both the

buyer and the seller of the land at the same time.

Maximum penalty:

200 penalty units in the case of a corporation, or

100 penalty units in any other case.

The statement ‘200 penalty units in the case of a corporation, or’ here would be

abbreviated to S48 (2) (a) However, in the spoken form this becomes: Section 48;

subsection 2; paragraph a

Parts and Divisions

In the longer Acts it is quite common to find a number of sections treated as a group.

That group is known as a part.

If the number of sections in a part is sufficient to justify doing so, that part may itself

be divided into smaller groups of the sections and those smaller groups are known as

divisions.


Marginal Notes

Marginal notes (which are sometimes called sidenotes) are used occasionally and they

appear in the margins of Acts.

They are not part of the Act itself. The marginal note is intended to give a brief

indication of the matters dealt with in the section or subsection against which it

appears.

Headings to sections

Each section of an Act contains a brief note to indicate the subject matter of the

section.

In earlier legislation, this information was in the form of the marginal notes. Headings

to sections are not debated in Parliament and cannot be formally amended.

The headings to sections form part of the Act. The following is an example of a heading

to a section:

48 Duty not to act for both buyer and seller of land

Footnotes

Most amending Acts contain footnotes setting out references to the principal Act and

other amending Acts. Footnotes containing other information are uncommon in Acts

passed by parliament but are frequently found in reprints of Acts.

These footnotes are added for the convenience of the reader; and cannot be amended

by parliament. The footnotes and endnotes do not form part of the Act.

Definitions

When the meaning of a word is open to argument, the meaning of the section in which

the word is used must itself be uncertain. To overcome this problem the legislation

drafter provides definitions set out in dictionaries and schedules to be appended to the

Act to clear possible confusion of the intended meaning of a word or term within the

Act.

Eg: Definition of a business day (PSAA 2002)

‘business day means a day other than a Saturday, Sunday, public holiday or bank

holiday in NSW’

Tables


Tables are a useful way of organising a large volume of information. In particular,

tables allow quick recognition of the similarities and differences in different cases dealt

with in the legislation and may also reveal the conceptual basis for those similarities

and differences very readily.

Tables may be operative, or merely an explanation or summary of operative

provisions.

Diagrams

Diagrams can also provide a useful method of communicating complex information.

For instance, a flow chart may give a simple overview of lengthy provisions detailing

with a complex process; a process of pre-qualification for a grant, application for the

grant and approval of grant applications might be represented in a one-page flow

chart.

Penalties

A penalty set out at the foot of a section, or subsection, means that a breach of the

respective section, or subsections, is punishable by a penalty not exceeding the

specified maximum amount.

For example: if a section comprises several subsections and the penalty is mentioned

at the foot of the fourth subsection, then such penalty applies equally to all previous

subsections prior to, and including, the fourth subsection. This penalty would not have

effect upon a breach of any following subsections.



Interpretation of Legislation

Interpretation of the Words in an Act

The reader must understand that words without meaning are not used in legislation

and wherever possible no clause, sentence or word is superfluous, void or insignificant

and that accordingly the reader should give the proper weight to every word used.

Some basic principles in the interpretation of a statute are, namely:

• The Act is to be read as a whole

• A section is to be read in the light of the Act as a whole

• Sections should be read in sequence

• Words should not be discarded

• Words are presumed to have consistent meanings throughout the whole of the

Act

• Words are to be interpreted in accordance with their ordinary and current

meaning

• The meaning of a word or phrase will be derived from its context

• Words are to be interpreted in accordance with their common usage

• Technical words are to be given their technical meaning.

The Act should be read as a whole, reading not just the words but rather the sections

and whole phrases, for complete understanding.


Wording conventions

The word ‘deemed’ has the meaning in ordinary use of ‘judged’ or ‘concluded’. The

word deemed may also be used in a definition to extend its meaning and to include

matters that may or may not fall within the scope of the word identified.

When the word deemed is used, the position is similar to where the word includes is

used in a definition.

The word ‘must’ means to be bound by some imperative requirement.

The word ‘may’ means a possibility, opportunity or permission; or a contingency with

respect to clauses expressing a condition, conclusion, purpose, aim or result.

The word ‘should’ is the past tense of shall and denotes a duty, propriety or

expediency; whilst ‘shall’ means it is imperative.

Reading rules

Words are not precise instruments for conveying ideas.

Any written text of substance has the potential to raise problems over the meaning of

the words used.

Ambiguity can arise both from within words individually, from their linkage with other

words and from the context in which words are used.

It is the inevitability of ambiguity, in the sense of different possible meanings of words

in statutes that gives rise to the need for principled interpretation of statute law by the

courts.

The aim is always to ascertain the meaning of the words Parliament has used. To the

extent that the words being considered are capable of different meanings, courts

endeavour to ascertain in a principled way which of them is the more probable

meaning.

This is the presumed meaning sometimes described as the "legal meaning".


There are four basic general rules of statutory interpretation; namely:

• The Plain Meaning Rule

• The Golden Rule

• The Mischief Rule

• The Purpose Approach

These are rules of general applicability and therefore are to be contrasted with rules

which apply only if the particular circumstances to which they relate occur in the Act.

The general approaches used in Australia to the interpretation of legislation are the

Plain Meaning Rule, and the Purpose Approach. To understand the statutory

requirements in relation to interpreting legislation that exist in all Australian

jurisdictions it is necessary to have an understanding of all these rules (also known as

approaches).

Plain Meaning Rule

The plain meaning rule can also be referred to as the literal rule, the ordinary rule or

the grammatical rule. It is a very simple rule. It means what it says. If the meaning of

the Act is plain, it is to be given that plain meaning. The test as to whether the rule is

to be applied is that the ordinary meaning is that which an ordinary person would place

upon it. Generally, if the words of a statute are clear and unambiguous, the courts give

them their ordinary meaning.

Golden Rule

If the statutory provision is ambiguous, the plain meaning rule cannot be used. An Act

must be read in such as manner so as to avoid a result of manifest absurdity (devoid

of meaning) or injustice. The court would conclude that the Parliament did not intend

injustice.

If the reader uses the ordinary meaning of the word and this gives rise to absurdity or

a result clearly inconsistent with the remainder of the Act, then the reader must use a

meaning that will remove the absurdity, injustice or inconsistency.

In the event of absurdity, ambiguity or inconsistency on the literal interpretation of the

Act, the court adopts the meaning which reflects the purpose of the legislation.

Mischief Rule

This rule is used to find the meaning of an Act when the meaning is obscure. To do this

the reader must ask four questions, namely:


• What was the state of the law before the Act was passed?

• What was the mischief or defect for which the law did not provide before the Act

was passed? What remedy has Parliament provided in the Act to cure the

mischief or defect?

• What is the true reason for the remedy?

When applying the mischief rule to an ambiguous provision (and it can only be applied

to an ambiguous provision) of the Act, the court will give an interpretation to that

ambiguous provision to alleviate the mischief.

Purpose Approach

The other general rule used for the interpretation of legislation at common law is the

purpose approach. This rule is a development of the Mischief Rule. Some Acts contain a

section known as a statement of principle which sets out the purpose of that

legislation.

Since the statement of principle is contained in a section of the Act, it must not be

treated as a preamble or a long title; but rather as a substantive part of the Act. The

purpose approach is applied only when an attempt to use the plain meaning rule

produced an ambiguity or an inconsistency.


State and Territory Laws

State and Territory governments have the power to make laws covering any area not

covered by Commonwealth laws.

Unlike the Commonwealth Government, there is no need for a State or Territory to find

a law-making power in its Constitution or in an international treaty (there might,

however, be a Constitutional question concerning the extent of the power that a

Territory has been given by the Commonwealth Government).

This means that States and Territories have a much wider scope to make laws than the

Commonwealth Government.

As soon as the Commonwealth government passes a law covering a particular area,

any State law covering the same area becomes invalid to the extent that it is

inconsistent with the Commonwealth law.

In other words, the Commonwealth law overrides the part of the State law which is

inconsistent, unless it is complementary. This is the effect of Section 109 Australian

Constitution 1901 (C’th).


Relevant Commonwealth Legislation

Australian Consumer Law

The Australian Consumer Law (ACL) is a single, national consumer law. It protects

consumers and business from false, misleading or deceptive selling practices. The ACL

is applied as a commonwealth law and applies nationally and in all States and

Territories and to all Australian businesses. The ACL replaced provisions in 20 National,

State and Territory consumer laws.

The ACL includes:

• A national unfair contract terms law covering standard form contracts

• A national law guaranteeing consumer rights when buying goods and services

which replaces existing laws on conditions and warranties

• A national product safety law and enforcement system

• A national law for unsolicited consumer agreements which replaces existing

State and Territory laws on door-to-door sales and other direct marketing

• Simple national rules for lay-by agreements and

• Penalties, enforcement powers and consumer redress

The ACL is enforced and administered by the Australian Competition and Consumer

Commission (ACCC), each State and Territory’s consumer laws. It is enforced by all

Australian courts and tribunals.

The ACL replaced the following fair trading and consumer protection laws in NSW:

• Fair Trading Act 1987 (NSW)

• Trade Practices Act 1974 (Cth); Parts IVA, V, VA and VC

As a national consumer law (which applies to all business sectors), the ACL covers

general standards of business conduct (such as: unconscionable conduct, false or

misleading representations, testimonials, sale or grant of an interest in land, offering

rebates, gifts, prizes and other free items, bait advertising), prohibits harmful

practices, regulates specific types of business-to-consumer transactions, provides basic

consumer rights for goods and services and regulates the safety of consumer products

and product-related services.


Privacy Act 1988 (C’th)

It is the intention of the Commonwealth Parliament that this Act is not to affect the

operation of a law of a State or of a Territory that makes provision with respect to the

collection, holding, use, correction, disclosure or transfer of personal information

(including such a law relating to credit reporting or the use of information held in

connection with credit reporting) and is capable of operating concurrently with this Act.

Such a law can have effect for the purposes of the provisions of the National Privacy

Principles that regulate the handling of personal information by organisations by

reference to the effect of other laws.

The Privacy legislation establishes a comprehensive national scheme providing for the

appropriate collection, holding, use, correction, disclosure and transfer of personal

information by organisations in the private sector. State and Territory laws that make

provision for the collection, holding, use, correction, disclosure or transfer of personal

information will continue to operate to the extent that they are not inconsistent with

the proposed Commonwealth legislation.

The objective of the Privacy Act is to reduce obstacles to the development, take- up

and use of electronic commerce and other new technologies resulting from concerns

about the possible mishandling of personal information by the private sector.


NSW Legislation

Property and Stock Agents Act 2002

Residential Tenancies Act 2010

Conveyancing Act 1919

Real Property Act 1900

Environmental Planning and Assessment Act 1979

Strata Schemes Development Act 2015

Strata Schemes Management Act 2015

Work Health and Safety Act 2011

Uncollected Goods Act 1995

Retail Tenancies Act 1994

Industrial Relations Act 1996

Anti-discrimination Act 1977

Swimming Pools Act 1992

Legislative changes

It is wise for agents to ensure that there is someone in their office to undertake regular

inspections of relevant government websites to identify any legislative amendments

that affect agency practice.

Ideally the agency would have a system in place to document and record versions of

all applicable Acts and Regulations and inform agency staff of changes or amendments

to the legislation, specified forms, and industry codes of conduct.

Version control of legislation in office risk management practice ensures only the most

current legislation, forms, industry codes of conduct and agency requirements are

used.


Industry resources

The Real Estate Institute of NSW (REINSW) is the peak professional association for

practitioners in the real estate industry and is recognised as a valuable and well-

respected organisation for real estate professionals.

Membership ensures real estate professionals have access to quality information and

research, peer support and opportunities to network, high profile selling avenues, and

industry training including the annual conference.

All Real Estate Institutes, as peak industry associations, are focussed on ensuring that

all member agents not only understand their legal obligations but are continuously

informed of the legislative and regulatory changes affecting the industry.


Agency responsibilities

Consumer Protection

Consumer protection and unfair trading are important issues in agency practice. Fair

business practices ensure that while genuine competition occurs, consumers are

protected. In turn this leads to greater trust and better business reputation.

Australian Consumer Law

The Australian Consumer Law (ACL) protects consumers and business from false,

misleading or deceptive selling practices.

There is a very broad provision in the ACL that prohibits conduct by a corporation that

is misleading or deceptive or would be likely to mislead or deceive.

It makes no difference whether the business intended to mislead or deceive - it is how

the conduct of the business affected the consumer thoughts and beliefs that matters.

If the overall impression left by an advertisement, promotion, quotation, statement or

other representation made by a business creates a misleading impression in your mind

- such as to the price, value or the quality of any goods and services - then the

conduct is likely to breach the law. For example, if an agent decides to ‘freshen up’ a

property by taking it off the market for a short time and then readvertises it as a ‘new’

listing, it may mislead buyers into thinking that the property has just been listed for

sale.

To reduce the chances of misleading, real estate agents must take care to:

• Disclose all information relevant to the price of the property

• Advertise the selling price based on a reasonable market appraisal or the price

the seller has indicated they are likely to accept

• Not make false claims about the price of the property by:

• Advertising a property as ‘passed in’ at a price higher than what was actually bid

at an auction

• Claiming that the vendor has already rejected offers more than they are willing

to pay, when no such offers have been made and/or rejected

• Advertising a property at a price that is less than a previously rejected offer

unless the seller is now prepared to accept a lower offer


• Not advertise or under quote a property at a price significantly less than the

selling price to attract interest in the property

• Not make false claims about the location, characteristics or use that can be

made of the land

Agents should take care in designing and writing advertisements for the sale or

management of properties.

The advertisements may be read by potential customers from interstate or even

overseas, especially if the agent advertises on the Internet. These potential customers

may not wish to inspect the property.

An agent’s standards of diligence and integrity are always regarded as high. The

advertisements must make only valid statements and contain no information which

cannot stand up to the rigours of scrutiny.

The statements made must be able to be substantiated by the physical search of the

property or by other legitimate inquiries made prior to the purchase. The real estate

industry and the regulators place great emphasis upon proper disclosures during the

negotiation of the property sale.

Examples of how the Australian Consumer Law (Section 30) applies to real estate

advertising include:

When advertising the availability of a number of units or blocks of land, it is more

informative to state the price of each; however, if a price range is used, it is desirable

to also state the price at which the majority are available

Advertisements providing information on the location of the land or distance from

facilities are less likely to mislead if they are factual; for example, ‘shops

approximately 1.5km’ rather than the subjective ‘walking distance to shops’.

Care should be taken to ensure that any factual statements about the characteristics of

a property are correct.


If agents have any doubts regarding any issues under this legislation, they should

immediately seek legal advice. Nevertheless, some general principles regarding the

application of the misleading and deceptive conduct provisions of the ACL can be

stipulated when:

• Determining liability for misleading or deceptive conduct, the intent of a person

is usually not relevant. The issue is whether conduct, tested objectively, has

been misleading or deceptive. It is not necessary for a person to have intended

to mislead or deceive in order for liability to arise under the ACL.

• Real estate agents may be liable in civil actions for passing on false information

even if they have received that information from others and reasonably believe

the information to be true, particularly if they appear to have adopted that

information.

Assessing whether conduct is misleading or deceptive, a Court will have regard to the

overall impression created by the conduct. Consequently, for example, the Courts will

often look at what has been implied by particular conduct in determining liability. This

can be particularly relevant when considering whether advertisements and other forms

of marketing are misleading or deceptive.

Silence may constitute misleading or deceptive conduct where there is a duty to reveal

relevant facts. Whilst the Courts have stated that there is no general duty of disclosure

in commercial dealings, the failure to disclose a fact may be regarded as being

misleading or deceptive, particularly where the recipient of a representation is entitled

to believe that a relevant matter affecting him or her would be communicated.

The stating of predictions or opinions can give rise to a liability for misleading or

deceptive conduct, particularly when those predictions or opinions are not based on

reasonable grounds.

Disclaimers and exclusion clauses do not, in themselves, absolve a person engaging in

misleading or deceptive conduct from liability.


The ability of intermediaries, such as real estate agents, to avoid liability when they

have merely passed on information without adopting it is unclear, agents maximise

their chances of avoiding liability for representations that have not originated from

them when they make that fact clear to the recipient of the information.

The High Court has suggested that a person who does no more than pass on

information supplied to him or her, making it clear that he or she is merely passing it

on for what it is worth and disclaiming its truth or falsity, may not have engaged in

misleading conduct if the information proves to be incorrect.

A real estate agent is unlikely to escape liability if they are aware or have cause to

believe the representations are false or misleading.

It is generally no defence to an action for misleading or deceptive conduct for a real

estate agent to claim that the consumer concerned should have checked the

information provided or for the agent to claim that the consumer has failed to make

reasonable enquiries.


Compliance with industry codes

Code of Practice

The Real Estate Institute of Australia encourages the highest standards in real estate

practice. Its unceasing aim is that the practice of real estate be universally recognised

as a profession; respected and trusted by all. As a necessary step towards this goal

REIA recognises the importance of setting out in clear and unambiguous terms a ‘Code

of Ethical Conduct’.

The REIA recommends this Code to all affiliated bodies. The Code should be observed

and practised by all members of affiliated bodies in the letter and the spirit.

In order that the Code may achieve its purpose, it is necessary that members of

affiliated bodies, such as REI, should have an intelligent appreciation of both the ethics

and the provisions of the Code.

Firstly, what is ethics? Ethics is defined as the science of duty, a system of principles

and rules of duty.

Secondly, how does this Code of Ethics affect members of affiliated bodies in the

conduct of their businesses? It is a standard of moral conduct promulgated by the

state Institute for the protection both the public and of members.

The Code, if conscientiously adhered to by all members of affiliated bodies, will

maintain the prestige of the state Institute, increase pride in your chosen calling and

render the conduct of your business easier and more pleasant.

To achieve these ends, both members and their employees must be well versed in the

provisions of the Code, always understand them and conscientiously observe them.

The confidential and responsible nature of an estate agent's work makes it a matter of

public concern that the integrity and reputation of a real estate agent should be

beyond question.


Rules of Conduct

The ‘Rules’ of Conduct form part of legislation, e.g.: schedule 1 of the Property, Stock

and Business Agents regulations, whereas, the ‘Code’ of Practice is a best practice

recommendation produced by a real estate industry body (eg:REI)

However, most Codes of Practice have been structured so closely to the Rules of

Conduct, if you have broken a Code of Practice, it’s likely that you have subsequently

broken a Rule of Conduct.

Objectives

The objective of the Rules of Conduct is to increase the accountability of real estate

agents for their actions in carrying on the business of a real estate agent. This

objective is achieved by:

• Setting conduct standards for real estate agents

• Establishing principles for fair trading in real estate agency practice

• Providing for a system of complaint resolution for complaints about real estate

agency practice

Breaches of the Rules of Conduct

A contravention of the Rules of conduct by an agent constitutes a breach of the

Regulations, which can result in the issue of a Penalty Notice or disciplinary action

being taken against the agent concerned.

Real Estate Agents and their representatives who breach the Rules of Conduct may:

• Be liable for disciplinary action

• Face considerable fines

• Have their names published along with details of the offence committed in the local or regional newspaper and on the Internet

• Lose their licence

• Have a claim awarded against them

• Face prosecution in a civil action

• Be prosecuted for damages in a civil action

• Have the matter referred for further investigation by NSW Fair Trading and the Australian Competition and Consumer Commission (ACCC)

Penalties and Personal Liability


For actions taken under the provisions of the Property and Stock Agents Act 2002 a

court may order a company or person who has made false representations or has

engaged in misleading, deceptive or unconscionable conduct to pay a civil penalty.

Additionally, if a company is ordered to pay a civil penalty or to compensate a person

who has suffered loss, but does not have the resources to do so, then any persons who

have taken part in the management of the company are jointly and severally liable to

pay the amount not paid by the company.

Ordinarily, this would include both executive and non-executive directors. A company

officer's only defence to this liability is to prove that they took all reasonable steps to

prevent the contravention, or that the officer was not in a position to influence the

conduct of the company in relation to the conduct in question.


The importance of keeping up to date with Legislation

Legislation ensures that the public is protected against unfair practices and

unscrupulous dealings.

The Property and Stock Agents Act 2002 is the governing legislation for the real estate

industry. It mandates NSW Fair Trading as the industry’s regulatory body and without

this legislation there would be no provisions for working in the industry or the

establishment and control of trust accounts.

This legislation must be at the forefront of your knowledge and understanding. It is

vital to keep up-to-date and fully understand all legislative requirements.

You should be aware of the impact of not working within the law.

Negligence

By far the most common legal claim against agency practice is one of negligence which

relates directly to this duty of care. In order to establish liability for negligence, a

claimant needs to be able to prove each of the following:

• A duty of care existed between the agent and the complainant at the time of the

incident

• There was a breach of the duty of care

• Damages resulted from that breach of duty

An agent is also responsible for the negligence of employees where these actions have

been committed within the course of their employment. The agent has a responsibility

towards tenants and buyers as well as their clear legal duty to sellers and owners.

Example

“An agent failed to lock a seller’s home adequately after an inspection, and

subsequently, it was burgled”. There is clearly a duty of care to maintain the security

of a seller’s property.

Failure to lock the home constitutes a breach of that duty. Since the seller experienced

losses during the burglary, there would be a justifiable claim for damages. This

negligent act by the agent may entitle the seller to claim damages against the agent.

Misrepresentation


One of the most onerous common law responsibilities of agents to buyers and tenants

is to not misrepresent information provided during the course of transactions.

Whilst it might be tempting to justify actions on the basis of achieving a sale or a

tenancy (which is obviously in the best interest of the principal), it is not acceptable to

ignore common law edicts of responsibility towards the other party.

It is imperative to provide buyers with whatever information is available on the

property, to ensure it is correct and appropriate, to seek out answers to questions as

they are requested, and to allow and encourage buyers and tenants to make whatever

investigations they deem appropriate before entering into transactions.

Conflict of interest

The agent’s role is often in conflict with the competing needs and rights of both parties

to a transaction.

This is the very reason why the agent or employee of an agent must be fully aware of

all the legislative requirements placed upon them, the common law duties to the

principal and the common law and consumer law requirements to buyers and tenants,

so that when the agent is faced with a particular decision or problem, the agent can

satisfy the needs of the person with whom they are dealing at the time, without failing

in their legal or ethical obligations to other parties.

For more information access the Rules of Conduct contained in Schedule 1 Property

and Stock Agents Regulation 2014.


Discrepancies between agency practice and personal practice

As you are licensed (certified) under the Act, you have a responsibility to ensure that

you comply with the rules and regulations, ignorance is no defence in a prosecution.

Knowing what not to do in the face of difficult situations will minimise any personal risk

that may occur. Under legislation you must have a knowledge and understanding of all

Acts and Regulations that may affect your dealings with property.

You may be asked to do or say things that may put you a difficult position of deciding if

it is ethical and/or lawful and the actions you will take.

If in a situation where you may be in doubt, it is important to refer the matter to a

supervisor or get advice from the regulator. There are many fact sheets and online

resources that you refer to, that provide accurate up to date information and support

within the real estate industry. Taking personal responsibility will also serve to enhance

and broaden further understanding of the structure, application and impact of

legislation within the real estate industry.


The purpose of trust accounts

Put simply, trust money is ‘other people’s money’.

All money received or held by an estate agent or any member of an estate agent’s

staff on behalf of any other person in the course of an estate agent’s business.

Agents should establish effective systems and procedures that minimise risk, error or

loss of trust funds. Ensure that expenses incurred are valid and of reasonable cost, and

that transactions are dealt with promptly in accordance with client instructions.

In relation to the management of trust monies, agents must ensure that there is an

agency agreement for each client before receiving any monies on their behalf and that

instructions for the disbursement of funds are clearly recorded in writing on the

agreement.

Agents should ensure that any subsequent instructions are obtained in writing from the

client and make sure that they follow all written instructions before using client’s funds

for any purpose.

Agents should promptly provide regular written statements as per legislative

requirements that outline trust funds received and disbursed and advise clients where

there are any discrepancies or problems in relation to their funds held in trust.

Agents should ensure written instructions are sought where financial details have

changed. The effective management of trust monies should be a primary concern of all

licensees.


Types of real estate trust accounts and trust money

Under the requirements of the Act and Regulations a real estate agency must operate

at least two types of trust accounts:

Property Management

The residential property management trust account would hold all receipts from a

tenant relating to the tenancy including rent, bond, water usage and any other fees

and charges until the end of the month when it would be disbursed in accordance with

agency policy and landlord instruction. The trust account balance should be zero at the

end of each month unless specific instructions are received to hold money over to the

next month.

Property Sales

The property sales trust account would hold all receipts relating to the sale of property,

these could include, deposits, marketing contribution and other money paid by the

vendor or buyer relating to the sale. This trust account will hold all monies until the

sale has completed and the order on the agent is received instruction the agency to

release the funds. As the property selling cycle takes more than a month the trust

account will have a carryover balance.

Example

Property Management Receipts Property Sales Receipts

Rent Deposit

Water usage Vendor paid advertising

Property Management Payments Property Sales Payments

Management fee Commission

Repairs or maintenance Advertising expenses

Legislation


Part 7 Property and Stock Agent Act 2002 contains the requirements for the operation

of the trust account.

It is important to be familiar with the not only the requirements under the Act but also

the Property and Stock Agents Regulation 2014 Part 4 Trust Money.

Roles and responsibilities

Licensee in Charge

Ultimately the licensee is responsible for every transaction that occurs in the trust

account. The Act states that it is assumed that every written record at the registered

office of the licensee is made by or with the authority of the licensee.

The Licensee in Charge is required to authorise all payments from the trust account

and cannot delegate this responsibility.

A notation at the bottom of the bank reconciliation, cashbook and trial balance should

state: “ I (name) Licensee in Charge verify that the entries prepared by (name) are a

true and accurate record of the months activities”; it should be signed and dated.

Your role

You may be required to assist in the operation of the trust account. This may be taking

rent from tenants, sales deposits from buyers or you may have a role in the entry of

data into the trust accounting system. Whatever the extent of your role it is important

to remember that there are significant penalties for not complying with legislation and

the policies and procedures of the agency.


Operation of the trust account

The trust account must be maintained in accordance with the Act and Regulations.

The definition of “Trust” money to be paid into an established trust account is:

• Money received for or on behalf of any person by a licensee in connection with

the licensee’s business as a licensee

• Is to be held by the licensee or (if the licensee is employed by a corporation) by

the corporation, exclusively for that person, and

• Is to be paid to the person or disbursed as the person directs, and

• Until so paid or disbursed is to be paid into and retained in a trust account

(whether general or separate) at an authorised deposit-taking institution in New

South Wales and approved by the Director-General

Trust money cannot be used to pay licensee’s debts and any interest earned on trust

accounts is to be paid to the Director General and deposited into the Statutory Interest

Account.

One of the General Rules of Conduct is for agents to keep client’s money separate from

their own and to account for all expenditure.

A full set of records must be maintained so that all transactions can be easily traced

from origin to conclusion. The records must be kept in a manner that complies with

requirements of the Act and Regulations.

Along with the requirements of the Act and Regulation, you must also be aware that

other legislation imposes certain obligations about general record keeping. This

includes taxation and corporation law.

Under the common law that governs the relationship between principal and agent, an

agent is required to:

• Take such care in keeping the goods (including money) of the principal as a

reasonably prudent person would take in caring for their own property

• Keep all monies and property of their principal separate from their own


Opening and closing trust accounts

Under the Act an agency that has both sales and property management must operate

two separate trust accounts. A trust account for property management must at the end

of each moth have a zero balance or have express authority form the landlord to hold

funds over to the next month.

A licensee who opens a general trust account must provide the authorised deposit-

taking institution (bank) with a unique identifying number obtained from NSW Fair

Trading (through NSW OneGov).

The authorised deposit-taking institution lodges its monthly returns using this unique

identifying number.

Each general trust account needs a unique identifying number. You will need to

register each account separately (if you maintain multiple general trust accounts).

Nominate which unique identifying number is associated with each account with your

bank.

If the trust account is held by a corporation, the trust account must be registered using

the corporation's licence number. NSW OneGov will provide licensees with the

necessary form(s) to notify the authorised deposit-taking institution in writing that a

new general trust account has been registered, and a unique identifying number

issued.

NSW OneGov will also notify NSW Fair Trading when a general trust account has been

closed and provide the licensee with the form to record the account closure details. The

form should be kept by the licensee.


Computerised trust accounts

If the trust account records are kept by a computer system, the Act requires:

• all records to be compiled in chronological sequence

• any changes to the principal’s name, address or code reference number, agency

description, trust bank account number must be disclosed before and after

changes

• all journals must balance before entries are made in the ledger

• journal reference numbers are allocated under program control

• all records and reports are numbered sequentially under program control

• no program should allow an account to have a debit balance

• no program should allow an account to be deleted unless the balance is zero

• any account that is to be deleted must have a hard copy produced

• each data entry field must be entered

• amendments to data already recorded must be done by a separate transaction

• a backup copy of all records must be made not less than once a month (good

business practice dictates back up daily)

• the most recent backup must be kept in a “safe” place


Security and integrity of trust account

A licensee must ensure the safety and reliability of the trust account. A checklist should

be in place to ensure that all the steps are followed and compliance with the Act is

achieved.

Segregation of duties is one practice that can help to maintain the security of the trust

account.

Established bank reconciliation procedures should be in place and done daily.

Trust account audit

The Act requires all trust accounts to be audited. The following people must have their

trust accounts audited if they received or held trust money during the financial year

ending 30 June or any other date that is approved by the regulator.

• a licensee

• a former licensee,

• a personal representative of a licensee.

Auditors must be registered with the Australian Securities and Investment Commission

(ASIC) or be qualified under s.115(1)(b) of the Act The audit report must be lodged

within 3 months after the end of the audit period to the Director- General, no later

than the 30th September.

The Auditor is also required to lodge a copy of the audit report with the regulator

within 14 days after providing the report to the licensee,

Internal Audit

It is not enough to only have the trust account audited once per year. The licensee

should instigate random audits to ensure that the transactions in the trust account are

all correct.


Trust account discrepancies

Mistakes can happen in the trust account. If there is a mistake or discrepancy it is

essential that it is corrected immediately, and a record is kept of how and why the

mistake was made. The trust account is audited every year and an auditor would

consider the explanation prior making recommendations to the regulator for further

investigation. Types of mistakes that may occur in the trust are:

Over drawing the trust account

The licensee must notify the Secretary, in writing, within 5 days of becoming aware

that the trust account is overdrawn. The following information must be given:

• the name and account number

• the amount overdrawn

• the reason for the account being overdrawn

The bank operating the trust account must also notify the regulator when an account

becomes overdrawn with the above information and also the date on which the account

became overdrawn.

Interest and bank charges

Under the Act there is no interest or charges levied against the trust account.

In reality bank charges that relate to the trust account are levied against the licensee’s

general account.

Interest paid by the bank for money held in the trust account is paid to the Statutory

Interest Account.

The amount of interest to be paid is prescribed by the Minister in consultation with the

Treasurer and can vary from time to time.

The bank must account for interest on daily balances after the end of each month.

Trust Account Fraud

Where money is deliberately taken from the trust account with the Principals

permission.


Trust Accounting Cycle

Source

Documents

• Trust receipts • Trust cheques • Invoices • Statements

Journals

• Cashbook contains • Cash receipts journal • Cash payments journal

Ledgers

• Trust bank ledger • Ledgers for each individual owner of property

Trial Balance

• Listing of all ledger accounts that have a balance other than zero

• Checking financial statements for errors or fraud Bank

Reconciliation


Receipts for trust money

As soon as trust money is received from a client, the agent must issue a receipt from

the trust receipt book.

Receipts must be issued for all amounts to be paid into the trust account. The receipts

in this book must have been consecutively numbered by machine, each receipt

consisting of the original and a duplicate.

Receipts must be issued in the numerical order of the series to which they belong.

Specific information must be shown on the trust receipt. This includes:

• The date of issue

• The receipt number

• The name of the licensee and the words ‘Trust Account’

• The name and ledger reference number of the person from whom the money

was received

• Why the money was received

• The sum and how it was received

The original of the receipt must be issued, on demand, to the person from whom the

trust money was received.

If an original receipt is not issued to the person from whom trust money came, the

licensee must retain this original copy.

The licensee must also keep all duplicate copies either in paper form or entered into a

complying computerised system.

Receipts issued for rent that has been collected must show the date to which the rent

has been calculated and if it is in advance or arrears.


Banking of trust money

All trust money received must be paid into the trust account before the end of the next

banking day or as soon as possible

The trust bank account:

• must be a separate account from the business account

• must have a duplicate copy of all money banked showing

• the date of the deposit

• the amount of the deposit

• whether it is cheques, notes or coins

• details of all cheques eg: name of drawer, bank details and amount

Disbursement (payments) from the Trust Account

Monies paid into a trust account must be held in that trust account until disbursed

according to the requirements of the Act. Authority to make payments from the trust

account must be in writing from the person entitled to the funds. (The client gives the

agent authority on the agreement).

Payment to the agent by way of commission is only to be made after the balance of

the money (if any) has been disbursed from the trust account.

Only the nominated Licensee in Charge can authorise the withdrawal of funds from

the trust account.

Payment of trust money

When the licensee makes payments from a trust account, these must be by cheque or

electronic funds transfer (EFT). Cash payments are not permitted.

Cheques must be marked not negotiable, show the name of the licensee, include the

words ‘Trust Account’ and be signed correctly.

Details of each cheque drawn must be entered manually or electronically into the cash

book.


All cheques:

• Must be machine numbered in sequence, be marked “not negotiable” and cannot

be made payable to cash

• Contain the name of the licensee or company name and the words “Trust

Account”

• Be signed by the licensee

• Cheques must be drawn in numerical sequence. If a cheque is drawn incorrectly,

it must be cancelled and the cancelled cheque kept.

Each cheque butt must contain:

• The number and date of issue, the name of the payee and the amount of the

cheque

• Details of the ledger account, the name of the person who owns the ledger

account and the reason for the transaction

If payments are made by EFT, the following records must be kept:

• The name of the person directing the transfer and under whose delegation it is

being made

• The date and reference number of the transfer

• The name of the payee

• The amount transferred to or from each ledger account

• Details of the ledger accounts debited and the name and ledger number of each

principal on whose behalf the transfer was made

• Reasons for the transfer.


Cashbook

The cashbook is the combination of cash receipts journal and cash payments journal.

Although it is called cash, it is for all types of money coming into the trust account,

cash, cheque or electronic funds transfer.

The cashbook:

• must show all amounts transferred to and from the ledgers

• the names of all ledger accounts debited or credited

• have account reference numbers

• show details and reason for transfer

• have consecutive receipt numbers issued or cancelled

• have consecutive cheque numbers issued or cancelled

• have consecutive reference for electronic funds transfers

• each page of the cashbook must be consecutively numbered

• must be balanced at the end of each month and carry the balance forward to the

next month.

Ledger Accounts

The ledger is a recording of money held on behalf of each principal. A separate ledger

account must be kept for each principal. It records the money into and out of the

account. It is important to remember that a ledger account must not have a debit

balance. The ledger:

• must show the name of the principal

• a reference number

• show the date and particulars of each transaction

• the amount of the transaction

• the balance after every transaction


Balancing and reconciling trust account

The cashbook must be balanced at the end of every month, this requires adding all the

receipts and subtracting all the payments to give a balance at the end of the month.

This balance must be the same as the closing balance on the bank statement. If, for

some reason after the cashbook balance and the bank reconciliation do not match,

then an investigation of why the discrepancy occurred would be undertaken.

This would include checking that all transactions have been correctly recorded in the

cashbook.

Bank reconciliation

The bank reconciliation is prepared to verify the bank statement against the cashbook.

It will prove the reliability of the trail balance and show any error, omissions or

transposition errors that may have occurred.

Trial balance

A trial balance must be done within 21 days after the end of the month. The trial

balance statement must show:

• the month it refers to and the date of preparation

• list all of the accounts that have a balance more than zero

• each account name, reference number and balance

• the total of the ledger account balances at the end of the month

• a comparison between the total of the accounts and the balance of the cashbook

and be reconciled with the balance in the trust account

One of the inadequacies of the trial balance is that it does not show that the ledger

postings are correct.

You can achieve a trial balance and still not be correct.

End of Month Processes Property Management

This term refers to the process that occurs in the property management department

where the money collected on behalf of landlords is disbursed, less any payments of


accounts authorised by the landlord and management fees owing to the licensee. A

statement is sent to the landlord stating all money into and out of their ledger account.

The process includes:

• Balancing the cashbook and finding the balance brought down

• Undertaking a bank reconciliation to confirm the total matches the cashbook

• Ensuring that all ledgers have a balance of NIL unless instructions have been

given to hold money over to the next month

• Preparing a trial balance to show why there is money left in the trust account at

the end of the month

• Sending statement of account to the landlords showing all rent received and any

payments that have been made on their behalf

The nominated licensee in charge is ultimately responsible to ensure that every

transaction that has gone through the trust account is correct and they will sign off to

say that the end of month statement is correct.


In summary, the nominated licensee in charge must:

• Provide a receipt to whoever pays money to the agency

• When an agent is given trust money, it must be banked before the end of the

next business day after it has been received. If this is not practical, it must be

banked as soon as possible after that day. This regulation offers protection for

clients and is good risk management practice for agents

• Never withdraw cash from that account

• Ensure trust money is kept separate from other bank account held by the

agency

• Account to the owner for all monies received on their behalf

• Lodge an audit with the Commissioner of Fair Trading


Annexure 1 Application of legislation in agency

Sales procedures

Keep your knowledge current

Read all relevant journals and publications. Check media regularly (newspapers and

television) and note issues or developments likely to impact on the market.

Join a professional association, such as the REIACT, to receive up to date information

and advice. Ensure all relevant staff receives copies of any information that may affect,

or impact upon their job.

Constantly update market knowledge by physically inspecting properties and

conducting thorough research before giving any advice or price estimates.

Communication

Communicate with vendors, customers and any prospects within the office. Discuss

market trends, developments or any areas of concern. Discuss and explain the sales

process beforehand with all parties involved.

Systems

Use systems that make the job easier and quicker but do not compromise on quality of

service delivery. Follow systems consistently and update them when required.

Vendors (Clients)

Your duty is to provide them with the best possible return from the sale of their asset

under prevailing market conditions. Always put their best interests ahead of your own.

Remember your duties at law to all parties involved in the transaction. Protect the

security of a vendor’s asset at all times.

Instructions

Ensure that they are clearly understood by both you and the client. Confirm everything

in writing, signed by the client.

Check wherever possible the accuracy of all information received from the client

(especially dimensions).

Inspect the property carefully and note any defects or disadvantages that are evident.

Identify all relevant legislation and regulations that affect the transaction.

Do not assume anything and pursue any doubt to your satisfaction.


Record every detail carefully and re-check for accuracy.

Remember an Office of Fair Trading approved guide for residential selling agency

agreements must be provided before signing, and that the statutory cooling-off period

for residential or rural agreements is one business day, which includes a Saturday.

Advertising and Promotion

Get the client’s consent and signature on the original schedule and on any required

additions or alterations.

Get the client to sign the proof copy of all material and draft advertising.

Stick to the set budget and ensure it matches any reimbursement stated in the

schedule and agency agreement.

Don’t make unsubstantiated claims about the property and use a disclaimer on every

page of any promotional material.

Representations

Think before you speak. Stick to your instructions.

Note any queries for follow-up, research and response and never guess the answer to

any question.

Diarise all dates and times and record all relevant points discussed with any party

involved in a transaction.

Do thorough research before making any predictions or price estimates. Have a

reasonable basis for any representation that you make. This is a legal requirement!

Think, be careful, and record everything that is relevant. Do not try to predict the

future.


Documentation

Use standard forms and letters for consistency.

Consider joining the REINSW and purchase/use its forms.

Take great care when completing agency agreements or any contracts.

Accuracy is vital. Identify parties.

Describe both of them and the property, accurately.

Make sure the correct date is used on all documents.

Check/confirm deposit/settlement details.

Fully understand and follow legislative requirements for agency agreements, consumer

guides, cooling-off periods, provision of signed copy to client within specified time etc.

Contracts for Sale

Have contracts in place, as required, prior to promoting residential property. Check

details, including the Section 149 Certificate and any special conditions. Make sure that

you understand them. Get legal advice if required.

If participating in exchanges of contracts, remember there is one contract consisting of

two copies (one signed by seller, one signed by buyer) and the copies must be

thoroughly checked to ensure that they are identical.

Know procedures to be adhered to in relation to exchange e.g. only completing details

on front page, not changing/deleting/adding any clauses/conditions etc. Copies must

be served on the relevant parties by the agent after exchange within two business

days.

Note: Assistant Agents cannot exchange contracts.

Reports or Presentations

Check and re-check them for accuracy. Use checklists.

As a precaution, get someone else to check reports and countersign them. Use

appropriate disclaimers but do not rely solely on them.

Use role plays to perfect presentations about your business and to help staff practise

how to deal with issues or objections that may arise.


Auctions

Check all documents thoroughly.

Clarify all procedures to be followed and stick to them.

Don’t bait prospective bidders with a low price estimate – it is illegal under legislation.

Keep the Bidders’ Record confidential, and only use it for that purpose.

Take all reasonable steps to ensure that a person who bids at auction has been

provided with a copy of the approved consumer education guide before the auction.

Have the client sign any change to, or setting aside of, the reserve price. Before

suggesting any method of sale, ensure that it is in your client’s best interest.

Don’t attempt to auction every property unless it really is the best option for that

client. Always exercise sound judgement in your recommendations.

Deposits

Make sure that you collect them.

Remember that, as an agent, you cannot ‘hold’ anything and there is really no such

thing as a ‘holding deposit’.

Contracts for the sale of land must be evidenced in writing and no amount of money

will guarantee a purchase prior to exchange of contracts.

The legislation is quite specific about ‘expression of interest deposits’.

That is all any preliminary payment prior to actual exchange of contracts constitutes –

only an ‘expression of interest’, not a ‘holding deposit’.

If there is a problem in collecting a balance of deposit after exchange, notify the

vendor and liaise with their legal representatives, as this should be addressed under

the conditions of the contract.


Records

Keep copies of all relevant documentation. Use a diary (manual or computerised) as a

record of events and to jog your memory, if required. Keep general records of all

transactions.

Maintain a neat and orderly filing system. Use a checklist and sales file for every

listing.

Use a complaints register and client/customer satisfaction surveys to refine and

improve your service.

Remember that written evidence or confirmation is a legal requirement for: Submission

of offers to vendors Obtaining instructions from vendors Setting aside the reserve price

at an auction.

Agency agreements must be evidenced in writing and be signed by the appropriate

vendor or vendors. No agreement = no claim by agent for fees or expenses.

All verbal advice and reports must have a sound basis and justification and should be

evidenced or confirmed in written form.

This may take time and effort to achieve but it provides a foundation for sound risk

management practices.


Property management procedures

Keep your knowledge current

Read all relevant journals and publications.

Follow media stories (newspapers and television) and note issues or developments that

impact on the rental market.

Keep track of vacancy rates, both within your market and your office. A vacant rental

property is a non-income producing asset.

Join professional associations such as the REINSW to receive up-to-date information

and advice.

Ensure that all staff members receive copies of any information that may affect, or

impact on their job. Constantly update market knowledge.

Communication

Communicate with clients, tenants, any prospects and within the office. Discuss market

trends, vacancy rates, developments or areas of concern.

Discuss and explain the property management process with all parties beforehand,

including all relevant rights and obligations.

Systems

Use systems and procedures that make the job easier and quicker but do not

compromise on the quality of service delivery.

Systems must flag all key areas such as rental arrears, lease renewals, inspections,

repairs and maintenance, insurance renewals, rent reviews, property vacancies, and

accounting to client (including any regular payments made on behalf of the client).

Follow systems consistently and update them when required.

Your duty

Your duty is to the client (landlord, lessor, property owner) and to ensure that you get

the best possible return for their asset under prevailing market conditions.


Portfolio

Maintain a portfolio for each property rather than a file. Keep the information about

each client and tenant in separate sections. Use checklists for portfolios to achieve

consistency.

Complaints Register

Keep a general complaints register and one in each property portfolio. Maintenance is a

separate issue.

Inspections

Record carefully all inspections by prospective tenants. Accompany prospects on

inspections.

If you are unable to do this, get written consent (as required by legislation) to give out

the key. Check the property afterwards to ensure its security.

Keep a comprehensive key in/out register that logs all activity.

Carry out regular routine property inspections, as per the agency agreement and

instructions.

Send a report to your client. Don’t just check on the tenant and the way they are

maintaining the property. Check for future maintenance or asset upkeep requirements.

Have regard to the tenant’s right to quiet enjoyment. Be aware of access rights and

periods of notice which must be given to tenant.

Respond promptly to all maintenance requests and reports. Have set procedures for

inspection follow up/action.

Tenancy Applications

Design a comprehensive system of paperwork and checks to ensure that prospective

tenants are who they say they are, and are properly assessed.

Use set procedures, adhere to them and record all information. Liaise with the client on

tenant selection.

Do not seek or disclose confidential / sensitive information that is not relevant to

tenant selection. Do not breach anti-discrimination legislation.


Client Notification

Promptly notify client of any issues or problems, along with your recommendations.

Have an agreed level of notification, the higher the better.

Maintenance

Only employ properly qualified, currently insured contractors and have them on hand

for emergencies.

Check contractors for security purposes and obtain a safe work method statement from

them.

Get references, and check them before engaging new contractors.

Record job details – who was allocated a job, and when. Have all job allocations/orders

evidenced in writing.

Have a system that records work completed, complaints or call-backs and checks on

the quality of the work performed.

Periodically check the quality of a job yourself. Pay invoices promptly to maintain the

relationship.

Security

The safety and security of your client’s asset and its occupants is at all times

paramount.

Ensure the correct measures and steps are taken to protect them at all times.

In All Cases

If a claim or complaint is made against you, do not admit liability. It may void any

insurance cover concerned. Document everything.

Notify the appropriate insurer immediately (professional indemnity, public liability, etc)

and seek their advice.


Written communication

Communication must involve both verbal and written feedback.

All instructions from your client must be confirmed in writing. In some instances, it is a

requirement under the Property, Stock and Business Agents Act 2002.

Some agents are proficient at verbal communication but overlook the necessity to

reiterate and confirm in writing.

Legislation requires written confirmation in certain areas of business and risk

management requires it in all areas of business.

Your message, when delivered in written form, is much more powerful evidence of your

service than just a phone communication, which may be forgotten.

Hence a regular written communication and feedback reporting system is a highly

effective risk management tool.


Annexure 2 Trust Account








© REINSW Learning Activity Workbook Cluster v1 October 2018 Page 75

Bank Reconciliation



Glossary of Terms

Act – A law made by the Parliament, known as an Act of Parliament. An Act

comes into being when a Bill that has passed all three readings in the Legislative

Assembly receives royal assent from the Governor. Sometimes referred to as

primary or principal legislation.

Alert Digest – The name of the document in which the Scrutiny of Legislation

Committee reports to the Legislative Assembly on the committee’s scrutiny of

Bills and subordinate legislation. For Bills, the Alert Digest reports the

committee’s concerns on a case-by-case basis, and reports on any further

consideration of those concerns following response from the Bill’s sponsor. For

subordinate legislation, the Alert Digest lists subordinate legislation with which

the committee has concerns, and on the completion of the committee’s inquiries,

incorporates correspondence recording the committee’s exploration of those

concerns with the relevant Minister.

Amending legislation – Legislation amending other legislation.

Amendment in committee – An amendment to a Bill, proposed during the

committee stage of the Bill in the Legislative Assembly, for omitting words from,

or inserting words in, the Bill.

Assent. See royal assent.

Authority to Introduce a Bill approval – A decision of Cabinet on an

Authority to Introduce a Bill submission, approving the introduction into the

Legislative Assembly of the Bill the subject of the submission.

Authority to Prepare a Bill approval – A decision of Cabinet on an Authority

to Prepare a Bill submission, approving the preparation of the Bill the subject of

the submission.

Authority to Prepare a Bill submission – An Authority to Prepare a Bill

submission explains the reasons for initiating a legislative proposal and its

implications, and asks Cabinet to give approval for the preparation of a new Bill

in accordance with the drafting instructions accompanying the submission.


Bill – Proposed primary legislation. It becomes an Act if passed by the

Legislative Assembly and assented to by the Governor.

Cabinet – The members of the Legislative Assembly holding appointment as

Ministers. Cabinet is the decision- making centre of government. The Premier

presides over Cabinet meetings.

Clerk of the Parliament – The senior parliamentary officer and the chief

executive officer of the Parliamentary Service. The Clerk of the Parliament is also

known as the First Officer of the Legislative Assembly.

Commencement proclamation – A proclamation commencing all or part of an

Act. A commencement proclamation is used only if the Act provides for all or

part of its provisions to start on a day fixed by proclamation.

Committee stage – The stage in the passage of a Bill through the Legislative

Assembly, between the Bill’s second and third reading, when the Assembly sits

as a committee constituted by the whole of the Assembly (the Committee of the

Whole House) to consider the Bill in detail, that is, clause by clause and schedule

by schedule.

Enact – Parliament’s act in making a Bill into an Act.

Erratum – An erratum to the explanatory notes presented with a Bill is a

document tabled in the Legislative Assembly to correct an error or other

inaccuracy in the notes.

Executive Council – The body that advises the Governor on the exercise of

powers by the Governor in Council. The Executive Council is customarily made

up of persons who have been appointed both as Ministers and Executive

Councillors. A meeting of the Executive Council requires a minimum of two

Executive Councillors. The Governor presides at Executive Council meetings,

which usually take place on Thursdays.

Executive government – 1. The Ministers appointed by the Governor to

administer the laws of the State. 2. The Ministers together with the departments

of State.

Explanatory notes – An explanation of the purpose and detail of proposed

legislation.


Extrinsic material – Material that is relevant to legislation but not part of the

legislation. Examples include explanatory notes and a second reading speech. In

certain circumstances, it may be used to help interpret legislation.

First reading – When the Clerk of the Parliament formally reads aloud the short

title of a Bill introduced into the Legislative Assembly immediately after the Bill’s

sponsoring Minister has moved that the Bill be read a first time.

Fundamental legislative principles – Guiding principles relating to legislation

that underlie a parliamentary democracy based on the rule of law. They include

requiring legislation has sufficient regard to the rights and liberties of individuals

and to the institution of Parliament

Government – A reference to the government is a reference:

• In the context of the Legislative Assembly: to the members recognised in

the Legislative Assembly as forming the government, or

• Otherwise: to the executive government of the State

Government Bill – A Bill sponsored in the Legislative Assembly by a Minister in

his or her role as a member of the government.

Governor – The Queen’s representative in Queensland. The Governor is

appointed by Royal Commission on the advice of the Premier. The Governor is

responsible for approving actions of the executive government and assenting to

Acts.

Governor in Council – The Governor acting with the advice of the Executive

Council.

Henry VIII clause – A clause of an Act of Parliament that enables the Act to be

expressly or impliedly amended by subordinate legislation or executive action.

House – This word is commonly used to refer to the chamber in which the

members of the Legislative Assembly meet.

Leader of the House – The member of the government in the Legislative

Assembly whose responsibilities include ensuring the government’s legislative

program is introduced into the Legislative Assembly, and dealt with there, in an

appropriately timely way.


Legislation – Written law made by the Parliament, or by a delegate of the

Parliament such as the Governor in Council. Legislation can be contrasted with

the common law and equity, which is found in court case law.

Legislation is ordinarily found in the form of Acts and statutory instruments.

Legislative Assembly – The elected members of Parliament, sitting as the

Legislative Assembly.

Long title – See title.

Member – An elected member of the Legislative Assembly.

Minister – A person appointed by the Governor, on the advice of the Premier, to

administer laws of the State. Ministers are customarily also made members of

the Executive Council. The Premier is also a Minister. The Ministers collectively

make up the government, and each Minister is ordinarily responsible for a

particular government department.

Order in council – An instrument made by the Governor in Council, ordinarily

under an authority stated in an Act, that identifies itself as being an order in

council. Provisions for the making of orders in council are not usually found in

recent Acts, their place having largely been taken by regulations (for

instruments of a legislative nature) and gazette notices (for instruments of an

administrative nature).

Parliament – The Queen and the Legislative Assembly. The Queen’s role in the

Parliament of Queensland is performed by her representative in Queensland, the

Governor, although the Queen may perform her role when personally present in

the State.

Plain English – The writing of legislation in plain English involves the use of

language, presentation, structure and style that makes the legislation easily read

and understood. It also seeks to ensure legislation is free of unnecessary

complexity and difficulty.

Portfolio – The administrative and legislative responsibilities assigned to a

Minister

Premier – The leader of the government. The Premier is a Minister and is the

chair of Cabinet.


Private member’s Bill – A Bill sponsored in the Legislative Assembly other

than by a Minister in his or her role as a member of the executive government.

Proclamation – An instrument made by the Governor, usually under an

authority stated in an Act, which identifies itself as being a proclamation. In

recent Acts, provisions for the making of proclamations are usually limited to the

making of proclamations for commencing provisions of Acts that did not

commence on royal assent.

Regulation – An instrument made by the Governor in Council, under an

authority stated in an Act, which identifies itself as being a regulation. Apart

from proclamations for commencing uncommenced provisions of Acts and rules

of court, a regulation is the form of subordinate legislation usually provided for

in recent Acts in cases where the subordinate legislation is to be made by the

Governor in Council.

Regulatory impact statement (or RIS) – A statement required to be

prepared about proposed subordinate legislation before the subordinate

legislation is made if the subordinate legislation is likely to impose appreciable

costs on the community or a part of the community.

Reprint – A reproduction of legislation. If legislation has been amended, a

reprint of the legislation shows the legislation as amended.

Retrospective operation – Legislation has retrospective operation if, once it is

made, it can at law be said that it took effect at a point in time before the time it

was made.

Royal assent (or assent) – Signification by the Governor in the Queen’s name

of assent to a Bill becoming an Act. This is the final step in the enactment of

primary legislation.

Second reading – When the Clerk of the Parliament formally reads aloud the

short title of a Bill introduced into the Legislative Assembly if, at the conclusion

of the second reading debate, the Assembly agrees to the motion that the Bill be

read a second time.

Second reading speech – The speech made by the member sponsoring a Bill

(the relevant Minister in the case of a government Bill) in moving a motion that

the Bill be read a second time.


Short title – The short name given to a Bill or Act, usually by its first clause or

section, consisting of a name and the year of enactment.

Sponsor – The sponsor of a Bill in the Legislative Assembly is the person having

primary responsibility for the introduction and passage of the Bill through the

Assembly. For most Bills, this is a Minister (although any private member can

also sponsor a Bill), and the Minister can be referred to as the Bill’s sponsoring

Minister. Also, the department administered by the Minister is commonly

referred to as the Bill’s sponsoring department.

Statute Book – All legislation taken as a body of law.

Statutory instrument – In general terms, a document made under the

authority, directly or indirectly, of an Act.

Subordinate legislation – A statutory instrument that is subordinate

legislation. Most subordinate legislation is in the form a regulation, rule, by-law,

ordinance or statute.

Sunset clause – A clause included in legislation that causes the legislation or

part of the legislation to be repealed at a specified future time.

Third reading – When the Clerk of the Parliament formally reads aloud the

short title of a Bill introduced into the Legislative Assembly if, after the Bill is

reported to the Assembly at the end of the committee stage of the Bill, the

Assembly agrees to the motion that the Bill be read a third time.

Title (or long title) – The words appearing at the start of an Act, before the

formal words of enactment, which describe briefly the Act’s purview. The title or

long title is to be distinguished from the short title or any preamble.

Uniform legislation – Legislation made in conjunction with other jurisdictions

with the intention of making the law uniform between the jurisdictions.

Sometimes referred to as national scheme legislation.