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Key developments

  • Draft Model Participation and Model Operating Rules
  • Contingency Fee Arrangements
  • Development of a Law Council policy position on climate change 
  • Community schemes reforms
  • BAS Services and the Tax Practitioners Board’s Legislative Instrument Power
  • Financial Services Royal Commission: Trustees of Registrable Superannuation Entities should hold no other role or office 
  • Automatic repeal of the Motor Accidents Compensation Regulation 2015
  • Inquiry into support for children of imprisoned parents in New South Wales
  • Modern slavery legal roundtable held in Sydney

Draft Model Participation and Model Operating Rules 

The Property Law Committee contributed to a submission to the Law Council in relation to draft version 6 of the Model Participation Rules (‘MPR’) and the Model Operating Rules (‘MOR’), issued by the Australian Registrars’ National Electronic Conveyancing Council (‘ARNECC’).

The Law Society strongly opposed the fundamental shift in the approach to verification of identity (‘VOI’) in the new MPR 6.5.2. The change effectively reverses the onus on the practitioner, mandating the use of the VOI Standard unless the practitioner is reasonably satisfied that it ‘cannot be applied’. 

The concepts of taking reasonable steps to identify, and the availability of a safe harbour through application of the VOI Standard, have become a daily part of conveyancing practice. In our view, such a fundamental shift, with substantial practical implications, should not occur without a very sound rationale and cost benefit analysis, including as to whether any failure to adequately verify identity has resulted in any loss in an eConveyancing transaction. 

We also made a number of drafting comments in our submission in relation to other parts of the MPR and the MOR.

Contingency Fee Arrangements

The Litigation Law & Practice, Ethics and Costs Committees contributed to a submission to the Law Council in response to its confidential Discussion Paper: Contingency Fee Arrangements. 

The Law Society acknowledged that there is a range of views held by both the Law Council’s constituent bodies and by its own members in relation to this issue. However, ultimately the submission expressed the view that the introduction of contingency fees would raise conflicts of interest which are not possible to satisfactorily overcome. While courts might be able to play a role in reviewing such arrangements, we suggested that this could only ever be a limited safeguard. 

We considered that the removal of prohibitions against lawyers entering into contingency agreements may not be sufficient to overcome solicitors’ fundamental ethical obligations to avoid any compromise to their professional independence and to avoid conflicts of interest set out in the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015.

The Law Society also considered that contingency fees may not, in practice, improve access to justice, as smaller claims are the most likely to be consumed by contingency fees, and only a limited number of law firms are likely to be able to absorb the costs of an unsuccessful action.

Development of a Law Council policy position on climate change 

The Law Society’s Environmental Planning and Development, Human Rights, Rural Issues, and Public Law Committees contributed to a letter to the Law Council in relation to a potential legal profession policy statement on climate change. 

The Law Council’s action on this issue was spurred, in part, by an open letter signed by 350 lawyers and legal organisations across Australia in September 2019 calling on the Law Council to take actions including ‘promote improvement of the law in relation to climate change for the benefit of the community’.

In the submission, the Law Society outlined the implications of climate change for governments, the legal profession, businesses and the broader community in Australia. The submission queried whether these implications would be best addressed by a legal profession policy statement on climate change; or whether provision of continuing education on the issue for the profession and the community, and participation in law reform processes related to climate change is likely to have more practical utility.

Community schemes reforms

The Law Society’s Property Law Committee contributed to a submission to the Department of Customer Service in respect of the draft Community Land Management Bill 2019 (‘Management Bill’) and the draft Community Land Development Bill 2019. 

We supported the general approach that has been taken in both Bills, to align community schemes legislation with strata schemes legislation, unless there are factors or circumstances operating in community schemes that warrant a different approach. We supported the majority of proposals and policy positions which underpinned the Bills. However, we suggested that further consideration of transitional provisions may be required, such as clarification whether this will only apply to schemes registered after the commencement of the legislation.

We did not support removing the right to legal representation in mediations conducted by the Department contained in clause 185 of the Management Bill. Generally, the Law Society supports a right to legal representation without the need to prove a person’s inability to adequately represent himself/herself due to limited education, disability, infirmity, limited comprehension skills or limited knowledge of relevant provisions of the law. In our view, the complexity of community schemes legislation should mean that if a party wants to have legal representation at mediation, that party should be able to do so without having to obtain the consent of all the other parties.

BAS Services and the Tax Practitioners Board’s Legislative Instrument Power

The Business Law Committee contributed to a submission commenting on the Tax Practitioners Board’s (‘TPB’) Discussion Paper, BAS Services and the TPB’s Legislative Instrument Power.

The TPB is reviewing the extent to which BAS agents may lawfully provide services under the previously issued Tax Agent Services (Specified BAS Services) Instrument 2016 and in particular, whether those services should be expanded, by way of a legislative instrument, to include additional services relating to the superannuation guarantee charge. We agreed that the proposed expansion would provide clarity for both BAS agents and the Australian Taxation Office and relates to services that are a natural corollary to those currently lawfully provided by BAS agents under the Instrument.  

Financial Services Royal Commission: Trustees of Registrable Superannuation Entities should hold no other role or office 

The Business Law Committee contributed to a submission to the Treasury commenting on draft legislation to implement recommendation 3.1 of the Financial Services Royal Commission. The draft legislation will prohibit the trustees of superannuation entities (‘RSE‘) from having duties other than those arising from or in the course of the performance of their duties as a trustee of a superannuation fund. The aim of the new licence condition is to minimise the risk of unmanageable conflicts of duties arising and promote improved outcomes for the beneficiaries of registrable superannuation entities. 

The Explanatory Materials provide a non-exhaustive list of the situations or relationships that give rise to a duty to act in another person’s interest. While this list is helpful, uncertainty remains. 

These amendments are proposed to commence on 1 July 2020 and will apply in relation to any duty that an RSE licensee had before, on or after 1 July 2020, although any breach of the condition will only occur on or after 1 July 2020. It would be preferable for transitional provisions to be inserted in the draft legislation so that RSE licensees who need more time to restructure their business operations can do so. 

Automatic repeal of the Motor Accidents Compensation Regulation 2015

The Injury Compensation Committee contributed to a submission to the State Insurance Regulatory Authority (‘SIRA’) providing comments on the automatic repeal of the Motor Accidents Compensation Regulation 2015. 

The submission notes that we support the remake of the Regulation to ensure the CTP scheme under the Motor Accidents Compensation Act 1999 continues to operate effectively until all claims under that scheme are finalised. 

Noting there are various claims which will take years to progress/assess (for example, in relation to the claims of infants injured just prior to enactment of the new 2017 CTP scheme), the letter recommends the Regulation account for the regular increases in the costs of the provision of legal and administrative services over time through annual indexation of legal costs. 

Inquiry into support for children of imprisoned parents in New South Wales

The Children’s Legal Issues and Indigenous Issues Committees contributed to a Law Society submission to the NSW Parliamentary Committee on Children and Young People inquiry into the support for the children of imprisoned parents in New South Wales.

The Law Society noted at the outset that there is a significant body of evidence illustrating the negative impact that parental incarceration has on a child. It creates a less stable and predictable home life, which increases the likelihood of the child offending in the future. This is of particular concern given 38 per cent of adult prison entrants in Australia have children in the community who are dependent on them for their basic needs.

In our submission, the Law Society commended SHINE for Kids, an organisation that supports the children of incarcerated parents in NSW. Our submission also noted the importance of having correctional centres available in regional areas, so that inmates can stay connected with their families and communities.

Modern slavery legal roundtable held in Sydney

The Law Society attended a legal roundtable on the implementation of the Modern Slavery Act 2018 (Cth) held in Sydney in February. Over recent years, the Law Society has contributed to a number of submissions in relation to modern slavery legislation at the state and federal level, with input from the Human Rights, Business Law, and Government Solicitors Committees. 

The legal roundtable took place at the Sydney office of Norton Rose Fulbright and was hosted by the Australian Government’s Modern Slavery Business Engagement Unit (‘MSBU’). Other organisations represented at the roundtable included King & Wood Mallesons, KPMG, the NSW Bar Association, and the Law Council. 

Attendees at the roundtable provided feedback in relation to the implementation of the Modern Slavery Act 2018 (Cth), which requires reporting entities to complete a Modern Slavery Statement every 12 months. The MSBU representatives also outlined strategies for addressing instances of modern slavery identified in supply chains during the reporting process.