Move over Marx brothers, here comes the Bligh Government

Linda Lavarch MP (State Member for Kurwongbah) noticed two Legal Aid lawyers sitting in the public gallery of the Queensland Parliament. “They had tears in their eyes as the Attorney rose to speak,” she later told her parliamentary colleagues while explaining how Legal Aid saw firsthand the misery caused by payday lenders’ interest rates. It was understandable, she said, that these lawyers would be emotional over State Attorney-General Kerry Shine’s Consumer Credit and Other Acts Amendment Bill 2007 which would limit the lenders’ charges.

Any conveyancing lawyers present would have also wept - less with joy over this overdue reform - and more with despair over the betrayal of real estate consumers by the Bill’s unrelated amendment of Section 24 of the Legal Profession Act 2007.

While the Bligh government was effectively giving a green light to legally unqualified estate agents to continue to prepare legally binding contracts, the weepiest moment came when the Attorney-General said his amendment gave “certainty” to agents and solicitors regarding their “roles and responsibilities” within property transactions. Yet Mr Shine’s office had been earlier briefed with examples of agents’ contractual recklessness, incompetence, ignorance and illiteracy.

The only “certainty” is that real estate agents will continue to control the contracting process.

In October 2007 I revealed in a Courier-Mail op-ed piece how Section 24 of the Legal Profession Act, in reserving legal work to lawyers, had since July 1 that year exempted and restricted the contract preparation role of agents to filling in details in preprinted documents. Agents could apparently no longer lawfully add clauses, conditions or annexures to contracts. Conveyancing solicitors, who constantly trouble-shoot agents’ contracts, jumped for joy.

Then in January last year, again in The Courier-Mail, I blew the whistle on how Attorney-General Shine (a former solicitor) had succumbed to real estate industry lobbying by signing off on a Legal Profession (Transitional) Amendment Regulation - retrospectively emasculating Section 24 and giving the foxes back their key to the chicken-house. Agents could keep on preparing contracts, and effectively practising law, as they always had. My article, which had questioned the legality of the Attorney-General’s action, soon came to the attention of the Queensland Parliament‘s Scrutiny of Legislation Committee. This Labor-controlled Committee, which is responsible for considering the lawfulness of subordinate legislation (regulations) and the application of fundamental legislative principles to such regulations, duly scrutinised what was essentially a get-out-of-jail-free-card for agents. The Committee was not impressed.

The law was being amended not by an Act of Parliament, but by executive action, and so was in conflict with the fundamental principle that “legislation should have sufficient regard to the institution of Parliament”. At the same time the regulation’s insertion of a new subsection into Section 24 was arguably not “required or permitted” by the Act’s regulation-making section. Having recognised that one of the Legal Profession Act’s primary objectives was the protection of legal consumers and the public generally the Committee regarded this regulation, by exempting real estate agents from the prohibition on engaging in legal practice, as in “direct conflict” with the Act. The regulation was therefore arguably “invalid at common law”.

No worries. This backflip on consumer protection has since July 1, 2008 become, with the unreserved blessing of parliament, a statutory backstab. The convoluted amendment of Section 24 spells out - like a Marx Brothers movie script - how agents (and their employees) are not unlawfully “engaging in legal practice” if they prepare or complete a property contract in the “ordinary course of business undertaken generally” by real estate licencees. A “property contract” means, incredibly, either “a form of contract or agreement generally recognised and accepted for use” by agents or one “previously prepared” by a lawyer.

Any agent may also lawfully prepare or complete a contract by “inserting information in a blank space”, as well as by inserting or altering a “term” if this is “authorised” or “given in writing” by a party to the proposed contract. Or if a lawyer previously prepared the insertion or alteration. No worries provided an agent “does not change the insertion or alteration except in relation to changing a detail about the transaction … or crossing or leaving out an alternative, or changing the grammatical form of words, of the insertion or alteration.” An agent need not take legal advice before anything is changed, crossed or left out.

Similarly, an agent need not ensure that anything authorised or supplied by a party was actually drafted by a lawyer, or that any “property contract” was actually prepared by a lawyer. Finally, an agent may insert or alter a previously lawyer-prepared term “whether or not” it was prepared “in connection with” the particular contract. Phew, what a dog’s breakfast!

The good news is that estate agents must still, by law, give consumers a “genuine opportunity” to obtain independent legal advice before signing anything. Few agents comply with this obligation which the Office of Fair Trading rarely enforces. The better news is that Section 24, as amended, clearly prohibits agents “giving legal advice in relation to a property contract”.

When it comes to clinching a listing or closing a sale, will old persuasive habits die hard? Any agent’s explanation - however simple, qualified, or helpful - of any form, clause, contract or document will be in breach of the law. The “no legal advice” disclaimers which have already been appearing on contracts may carry little weight with the Legal Services Commissioner who, rather than Fair Trading, will police agents’ “illegal” advices.

But don’t hold your breath. The Legal Services Commissioner has already refused to test the validity of the retrospective regulation in light of the Scrutiny of Legislation Committee’s views:

Whilst the Court may well find that the view of the Committee is correct, it is clearly the intention of the Government that agents should be allowed to be substantially involved in the process of preparing property contracts. In those circumstances the use of the Commission’s financial resources in making such an application would not be in the public interest.

“Merely talking about legal advice is not enough,” the Commissioner also declared when he declined to take any action regarding one agent’s public assertion that agents were “professionally qualified” to give “expert” legal advice to their clients.

Meanwhile, despite the Attorney-General’s tear-jerking “certainty” assurance to Parliament, his office subsequently confirmed his awareness of complaints about agents’ contract preparation and “drafting deficiencies”. Nevertheless Mr Shine saw “benefits in continuing the long established practice of allowing real estate agents to prepare or assist in filling in contracts.” A “major” benefit? “The avoidance of significant delays and additional costs in the sale process.”

What a crock, Kerry! The truth is that any benefits will be for commission-hungry agents whose “drafting deficiencies” will continue to cause consumers’ delays, costs and uncertainties.