The National Law also provides for the identification of a relevant person or persons for a body corporate and stipulates that they are subject to personal and financial probity checks. This aims to prevent a person from hiding behind a corporate structure, for example, where an individual has been banned from undertaking work in a licensed occupation and endeavours to use a corporate structure as a front to continue operating in the industry.
All jurisdictions current have a director identification check as part of the eligibility requirements for a corporation.
It is proposed that relevant persons for the property occupations are:
For a body corporate—
(i) each director of the body corporate; and
(ii) any other individual in effective control of the business of the body corporate;
For a member of a partnership, each member of the partnership.
A person in effective control of the business of the body corporate includes an individual who—
(a) is regularly or usually in charge of the body corporate’s business; or
(b) is in a position to control or influence the conduct of the body corporate’s business in a substantial way.
Stakeholders were invited to comment on the proposal that personal probity requirements should also apply to a relevant person. While submissions were silent on this issue, strong views were expressed about the personal probity arrangements and this is discussed below.
Given that feedback supports the proposal for relevant person and no evidence was provided which would suggest any changes, no change to the proposal is being recommended.
12.Personal probity requirements
The National Law makes provision for the personal probity requirements that will apply to an individual, and relevant persons for a body corporate and a partnership. The extent of the personal probity requirements applied is dependent of the licence category, as set out below:
All licences categories
Matters relating to criminal history, which can include offences relating to dishonesty, offences relating to misleading and deceptive conduct, drug trafficking offences and offences against the person.
Matters relating to an offence under section 9, 10 or 1148of the National Law.
Real estate agent licence, business agent licence, strata managing agent licence
Matters relating to the conduct of a person in carrying out business, including, for example, matters relating to duties as a director of a corporation or the imposition of civil penalties or orders in relation to carrying out business.
Probity checks occur in all jurisdictions; however the checks applied can differ in each jurisdiction. A person must be ‘a fit and proper person’ or a ‘suitable person’ to be eligible for a licence in all jurisdictions except the Australian Capital Territory. The jurisdictional legislations are not specific about the requirements are to be a ‘fit and proper’ person. In some cases this can be broad and include criminal history checks or disclosure of offences. Further to this, Victoria, Queensland, Western Australia and the Northern Territory also include checks for drug trafficking offences and offences of violence. Attachment A contains a concise overview of current licensing arrangements.
It should be acknowledged, however, that legal case history indicates that refusal to grant a licence on such grounds may be overturned on appeal to the courts, precisely because of the lack of direct connection between the offence and the carrying out of the occupation. There are social justice factors to be considered where a person is prevented from earning a livelihood due to past behaviour for which a penalty has been paid.
The criminal history requirements proposed in the Consultation RIS were only to the extent that there is a connection between the criminal history of the person and the inherent requirements of the occupation for which the person is an applicant, licensee, nominee or relevant person.
However, real estate agents and agent/sales representatives routinely enter customers’ premises for the purposes of assessing value, conducting open home inspections and undertaking property management. In many cases, licensed agents also have access to keys for the properties they are managing. A recent newspaper article described how two real estate agents, who were involved in a multi-million-dollar drug ring, allegedly used rental properties they were managing to grow thousands of marijuana plants as part of an elaborate drug syndicate.49
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has produced the public Money laundering in Australia report to help counter money laundering through greater public and industry awareness. The report states that the crime of money laundering involves diverse and often sophisticated methodologies. It corrupts and intermingles with legitimate transactions in areas such as banking and finance, casinos and gaming, high-value assets like real estate and luxury vehicles, international trade, and international remittance and foreign exchange services50. Money may be laundered through real estate by manipulating property values, mortgage and investment schemes, complex corporate vehicles and loan arrangements. In 2004 it was estimated that $651 million worth of laundered funds were invested in real estate annually51.The National Law includes provisions52 for what is considered an offence under the National Law. The offences include; carrying out regulated work while unlicensed or not exempt, engaging a person to carry out regulated work who is unlicensed or not exempt, and advertising or offering to carry out regulated work while unlicensed or not exempt. It is proposed that these offences are taken into consideration under the personal probity requirement for applicants of agency licences; real estate agent, strata managing agents and business agents, who hold responsibility for employing licensed persons, and the advertising or promotion of the business and to ensure that a licence is not incorrectly renewed or issued by the regulator.
While 42 per cent of all submissions were silent on this issue, strong views were expressed by those that provided comment, particularly the Real Estate Institute Australia (REIA). The REIA, which made a submission on behalf of the seven state institutes, and the Real Estate Institute of New South Wales (REINSW), expressed strong disagreement with the proposal. These stakeholders wish to include drug trafficking convictions and offences in relation to violence against the person in the probity requirements. A number of others, in both the submissions and the consultations, strongly support the broader probity requirements.
Conversely the Business Council of Australia considers that the Decision RIS should recommend removing the personal probity requirements from the licensing schemes as it argues that these replicate protections offered under other laws.
As outlined above, all jurisdictions currently have probity check requirements. The inclusion of additional criminal history checks in relation to drug trafficking convictions and offences violence against a person for real estate agents and agent’s representatives would have a minimal cost impact in the jurisdictions where this is not currently required. The cost of a criminal history police check does not appear to be affected by the scope of search.
It is proposed that:
All licence applicants will be subject to criminal history checks in relation to offences relating to dishonesty, offences relating to misleading and deceptive conduct, drug trafficking offences and offences against the person; and checks for convictions of an offence under the National Law or corresponding prior Act in relation to carrying out unlicensed work within the last 5 years.
Applicants for real estate agent, business agent and strata managing agent licences will be subject to checks for matters relating to the conduct of a person in carrying out business, including, for example, matters relating to duties as a director of a corporation or the imposition of civil penalties or orders in relation to carrying out business.
It is recommended that NOLA develop administrative guidelines to ensure consistency in applying probity requirements.
It is proposed that an applicant for a real estate agent’s licence, a business agent’s licence and a strata managing agent’s licence must meet both insolvency history requirements and not have any outstanding fines related to the occupation. An applicant for an agent’s representative registration and a real estate auctioneer’s licence under national licensing must also not have any outstanding relevant fines. The full description of the financial probity requirements are shown in Table 3.12 earlier in this chapter.
Currently all jurisdictions have financial probity requirements, which range from bankruptcy or insolvency history checks in all jurisdictions to checks for relevant unpaid fines in all jurisdictions, except Tasmania and the Australian Capital Territory. Attachment A contains a concise overview of current licensing arrangements.
Financial probity eligibility requirements aim to determine whether the financial integrity of the applicant is such that the risk for consumers in dealing with the licensed person is minimised. One of the aims of licensing of business entities is to protect consumers from those who have been involved in the mismanagement of business. As with personal probity, the regulator will have the authority to refuse a licence application if the set standards are not met.
There was strong support for the proposed financial probity requirements contained in the Consultation RIS. The analysis of the electronic survey responses indicates 48 per cent of respondents agree with the requirements, while 18.2 per cent disagree. Overall 42 per cent of the total number of submissions was silent on this issue.
Based on the logic above, the lack of evidence supporting change to the proposed arrangements, and the strong support for the financial probity requirements shown in Table 3.12, no change to the proposal is being recommended. The estimated cost of this proposal is considered to be minimal for Tasmania and the Australian Capital Territory and has not been costed.