Footnotes required. No bibiliography
QUESTION 1 [20 marks] The following clause is contained in special conditions you receive from another licensed conveyancer for your purchaser client. You are shocked at the wording used and write to the conveyancer with a redraft of the clause. “35. If the name of the vendor’s estate agent is not disclosed in this contract, the purchasers warrant that they were not introduced as purchasers to the vendor or to the property, nor were they notified that the vendor’s property was for sale, nor have they become aware of the availability of the vendor’s property for sale through or by, directly or indirectly, the action of any person, firm or corporation, which may be entitled to charge the vendor commission in relation to the sale of the property by reason of that action. The purchasers hereby indemnify and shall keep indemnified the vendor from any and all claims for commission charges by any agent and against all claims, actions, suits, demands, costs and expenses arising by reason of any breach of this warranty. This condition shall not merge on or be extinguished by the transfer on completion”. Explain exactly what is wrong with the drafting in the clause above. QUESTION 2 [20 marks] Following a routine investigation of a licensed conveyancer’s practice by an officer of the Office of Fair Trading in October 2018, the following findings are reported to the Compliance Division. 1. The trust accounts for the practice have not been written up since July 2018. 2. No bank reconciliations or trial balances for the trust account had been prepared since June 2018. 3. No ‘statement of accounts’ had been sent to clients at the end of three conveyances. 4. The licensee holds a ledger account in his own name. 5. The licensee has deposited $500 to his office bank when paid on account of (i.e.in anticipation of) costs and disbursements in the matters of Johnson purchase. 6. The investigation showed a debit of $1000 in a trust ledger in the name of James Kennedy. 7. There was a journal transfer of $2000 to the licensee’s own account from a sale matter for Smith but no costs disclosure had been given or an itemized bill rendered in the matter. 8. There was a journal transfer from trust to office in the Davis purchase matter but nothing recorded in the ledger or in the cash book. 9. No audit certificate had been lodged with Fair Trading by 30 October. As the Director of the Compliance Division of the Office of Fair Trading you review the investigating officer’s findings and make some notes on each of the 9 reported findings setting out whether taking any further disciplinary action can be justified. You are to refer to the relevant sections or clauses of the legislation and to any cases to support your view. QUESTION 3 [20 marks in total] Part B [10 marks] Karen telephones before her appointment and she tells you she has changed her mind and wants the power of attorney to be an enduring one and not limited only to the sale. She also has a few issues she wants you to explain to her and you note these down as follows: 1. Can you prepare and complete an enduring power of attorney for her and her husband at the same time? 2.What is meant by “ademption” in relation to a Power of Attorney (What is it and how does the Power of Attorney legislation affect the concept)? 3.Can she appoint her other son Robert Alan Drew as an attorney as he will be 18 in three months time? 4.Her husband has had a minor stroke and has some lapses of concentration will this have any effect on his ability to act as an attorney? 5.Her son Robert is in some minor financial difficulties at the moment, does it matter if he is made bankrupt? Respond to Karen’s questions in a short letter. NSW legislation - Conveyancers Licensing Regulation 2015 Conveyancers Licensing Regulation 2015 Current version for 31 October 2018 to date (accessed 13 November 2019 at 10:14) Part 5 Part 5 Trust money Division 1 General 15 Definitions (1) In this Part: associate, in relation to a licensee, has the same meaning as it has in Part 8 of the Act. cash book means the record required to be kept under clause 17 (c). trust money has the same meaning as it has in Part 5 of the Act. trust receipt book means the record required to be kept under clause 17 (a). viewable form, in relation to a record, means a form that enables the production of the record, on demand, in permanent legible form in the English language. (2) A reference in this Part to a trust account is a reference to a trust account required to be maintained by section 53 of the Act. 16 Keeping of records generally (1) A licensee must keep the records required by this Part in viewable form. (2) A licensee must keep the records concerned (including any records kept by means of a computer system) at the place of business where the licensee conducts the conveyancing business under the licence. (3) A licensee who conducts a conveyancing business under the licence at more than one place of business is taken to comply with subclause (2) if the licensee: (a) keeps the records relating to business transacted at a particular place of business at that place of business, or (b) keeps the records relating to the business transacted at each place of business at one place of business specified in a written notice given to the Secretary. (4) A licensee must, within 21 days after the end of each month: (a) compile with the records kept by the licensee under this Part the original, or a true copy, of the trial balance statement prepared by the licensee in accordance with clause 28 for that month, and (b) maintain a summary of the total of trust money disclosed in the trial balance statements for that month. Published by NSW Parliamentary Counsel’s Office on www.legislation.nsw.gov.au Page 1 of 10 Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case. 17 Specific records to be kept by licensees Every licensee must keep the following records: (a) a trust receipt book containing the duplicates of all receipts issued from that book (the duplicates being machine-numbered consecutively to correspond with the machine-numbered receipts), (b) a deposit book of an authorised deposit-taking institution referred to in section 53 (1) (c) showing all deposits made by the licensee into the trust account or some other written or electronic record showing those deposits, (c) a trust account cash book or some other written or electronic record of all receipts of amounts required to be paid into, and of all payments made from, the trust account. 18 Computer records (1) A licensee who keeps records for the purposes of this Part by means of a computer system must comply with this clause. Maximum penalty: 40 penalty units in the case of a corporation or 20 penalty units in any other case. (2) The licensee must keep a record, compiled in chronological sequence, of all changes (by creation, amendment or deletion) to any of the following information, showing the details of the information before and after the change: (a) client name, (b) client address, (c) matter number, (d) matter description, (e) client number, (f) trust account number. (3) The licensee must ensure that computer programs relating to ledgers: (a) are not capable of accepting the entry of a transaction resulting in a debit balance to an account unless a contemporaneous record of the transaction is made in such a manner as to enable the production in viewable form of a separate chronological report of all such occurrences, and (b) are not capable of amending the particulars of a transaction already recorded otherwise than by a separate transaction effecting the amendment, and (c) are not capable of deleting an account unless: (i) the balance of the account is zero, and (ii) when the account is deleted, a record of the account will be retained in viewable form. Conveyancers Licensing Regulation 2015 [NSW] Current version for 31 October 2018 to date (accessed 13 November 2019 at 10:14) Page 2 of 10 (4) The licensee must also ensure the following: (a) that each computer program requires input in each field of a data entry screen intended to receive information that this Regulation requires to be included in trust records, (b) that entries in the ledger of a journal balance before further entries are made, (c) that journal reference numbers are allocated in sequence by the computer program, (d) that entries in a record retained in viewable form appear in chronological sequence, (e) that a report, or each page of or entry in a report, is numbered in sequence by the computer program in a manner that enables easy verification of the completeness of the records that this Regulation requires to be kept, (f) that a back-up copy of all records that this Regulation requires to be kept that are kept by means of a computer system is made on a computer disk or magnetic tape, or by other electronic means, at least once in every four weeks, (g) that the most recent back-up copy is kept in such a place that any incident (such as a power or disk failure) that could adversely affect the records would not also affect the back-up copy. 19 Statements of account (1) A licensee must, in accordance with this clause, furnish to each person for whom or on whose behalf money is held by the licensee a separate statement of account in respect of the ledger account maintained for the person. (2) The statement of account must be furnished: (a) within 14 days after the licensee receives a written request for the statement, and (b) within 21 days after each of the following: (i) completion of the matter to which the ledger account relates, (ii) the closure and removal of the account from the relevant ledger, (iii) except as provided by subclause (4)—31 March and 30 September in each year. (3) The statement of account must contain particulars of: (a) the money received and held by the licensee for or on behalf of the person in the course of the licensee’s conveyancing business, and (b) the disbursement of the money, and (c) the remaining balance of the money, and must identify the transactions to which the particulars relate. (4) A licensee is not required to furnish a statement of account under subclause (2) (b) (iii) if, at the relevant day: Conveyancers Licensing Regulation 2015 [NSW] Current version for 31 October 2018 to date (accessed 13 November 2019 at 10:14) Page 3 of 10 (a) the account has been open for less than 6 months, or (b) the balance of the account is zero and no transaction affecting the account has taken place within the preceding 6 months, or (c) a statement of account has been furnished within the preceding 6 months