Fingers in the biscuit barrel

I have just had the opportunity to read an interesting case from the Administrative Decisions Tribunal (ADT).  In 2008, Member Steven Montgomery brought down a decision in a licensing appeal of Davidson versus the Commissioner of Fair Trading.  It was an interesting case not only in its findings, but because it quoted a decision of the Commissioner’s delegate, which shows the thought processes of the Office of Trading.

Mark Davidson was appointed Licensee-In-Charge of Elders Griffiths. He was not the owner of the franchise or of the businesses being operated.  He was merely the Licensee-In-Charge. Elders appointed a book keeper to oversee the accounts on behalf of the company.

Property managers in the company were given the standard access to work on a trust account. Through various means, the property manager was able to transfer into her own account $434,000.  This was not picked up by the book keeper, nor was it identified in any of the trust accounts audit undertaken by the company auditor.

The property manager was put in goal for two years. The initial decision of the Office of Fair Trading was to disqualify Mark Davidson from holding a licence for a period of five years. He was granted a certificate however to continue working within the industry. The decision was appealed to the ADT and some three years later the decision was handed down.

Member Montgomery quoted large slabs from the decision of Andrew Wilson, Director, Compliance, Office of Fair Trading.  Mr Wilson held that it was the Licensee-In-Charge’s responsibility to oversee the accounts and not a book keeper.  Although Mr Davidson had also signed off on trial balance reconciliations, he had not checked it against any source documents.  Mr Wilson held that this was not sufficient proper supervision.

Mr Wilson went to some length to clearly define proper supervision. After some considerations from the Macquarie Dictionary, he indicated that “proper” meant “accurate”. “Supervision” meant “the oversight of the execution of duties”. Mr Wilson therefore concluded that proper supervision meant that a Licensee-In-Charge responsibility was to “oversee the accurate execution of duties of employees”.

Member Montgomery endorsed this definition.  Mr Montgomery’s interesting slant was to also conclude that the establishment of poor policies and procedures may lead to failure to “properly supervise”.  Mr Montgomery said that where policies and procedures are in place which increase the risk of theft or non compliance, proper supervision has not occurred.

Member Montgomery believed that the procedures whereby the Licensee-In-Charge merely checked reconciliations and trial balances was not sufficient.  Member Montgomery believed that the agent needed to have checked bank statements, cheque butts and other source documents as a means of ensuring that a reconciliation trial balance was correct.  Due to this study, and the time that Davidson spent out of the industry, Mr Montgomery reduced Mr Mark Davidson’s sentence to 18 months. This is a reduction in time, however the ADT has upheld the viewpoint of the Office of Fair Trading.

In conclusion, your policies and procedures must be in place and must be such that they ensure that compliance is being effected.  Merely signing off on documents is not sufficient. Practices need to be in place to show that all reasonable attempts have been made to ensure that an agency is compliant.

The Davidson case appears to demonstrate the following:
• agencies should be careful in who can sign off on cheques;
• agencies should be vigilant in authority for electronic fund transfers;
• balance sheets need to accompany trial balance and reconciliation been checked off by Licensee-In-Charge;
• random audits of cheque butts, EFT transfers and other documentation need to be undertaken by the  Licensee-In-Charge;
• a bond reconciliation needs to occur to ensure that all bonds have been lodged with the Rental Bond Board; and
• source documents should also be initialed by the Licensee-In-Charge.

Strata Managers carry far greater amounts in a trust account than any other agent. Leverage is experiencing a number of clients who have experienced good employees who have for different reasons needed to “touch” the trust account.  We are not talking about effective employees, but loyal employees for a number of years.  We are in the middle of a financial holocaust, and these are the times that Licensees-In-Charge and those who own businesses, need to be internally vigilant.

If you require a health check or any full assessment, please contact the office of Leverage Australia.  We have people who are experienced in this area and can provide assistance to you if required.

Until next time

Bailey Compton and the team at Leverage Australia and  The Australian College of Professionals

Fair Trading Alert! A new breed with new goals

Sometime in mid to late 2008, the Director of Compliance of the Office of Fair Trading, Mr Andrew Wilson, resigned. At the same time as appointing a new Assistant Director General to handle that area, the investigations unit was completely overhauled.  Specialist units were disbanded and investigators were stream lined. On top of this, all senior investigators jobs were made vacant and advertised. Many senior investigators have now lost their position and new persons appointed.

Time will only tell whether this is a good or a bad thing from an industry standard perspective. Nevertheless, what will happen is that a re-enthused investigative regime will target identified problems.  There is no doubt that Leverage Australia’s clients have been faced with more letters from the Complaints Unit and the investigators than ever before. This is evidence of a new vigilance.

One of the areas we should be concerned about is continuing professional development. Leverage is aware that 200 letters have been sent out randomly to agents throughout New South Wales. These letters go direct to the sales person or the property manager and not to the company concerned. They are being required to produce evidence of continuing professional development prior to their last license renewal. They are not just asking for a copy of a receipt that it was undertaken, but a copy of a certificate of attainment.

We suggest that all agencies make certain that their certificates of attainment for the last two years are in order. We would suggest those who hold an administrative position in agencies, have a central file for all these certificates to be kept.  Many of our clients seem to have lost their certificates of attainment, not expecting to be asked.  The anxiety we suffer and the trouble they need to go to re-obtain their certificate has been in some cases disadvantageous to their business.

If you haven’t done continued professional development you need to contact the Australian College of Professionals urgently to get your CPD Points up to date.

Until next time, Bailey Compton and the team at Leverage Australia and the Australian College of Professionals

General Obligations and Repairs~Four Simple Steps

Section 62 of the Strata Schemes Management Act 1996 imposes obligations on the Owners Corporation to maintain the common property in a “good workman like standard”.  This function is usually delegated to the licensed strata manager under their agency agreement.  Notwithstanding these delegations, the Owners Corporation through its Executive Committee usually approves all repair and maintenance jobs.

Unfortunately, Owners Corporations don’t always fix what needs to be fixed. They either don’t want to fix it now or they don’t have the money to fix it and don’t want to raise the special levys to allow the problem to be remedied.  It often places the strata manager in a difficult position regarding repairs which may cause danger if not undertaken.

There are four basic obligations of a licensed Strata Manager:
• to advise;
• to inform;
• to select;
• to arrange.

These are generic objectives and special circumstances may cause a variation from those circumstances.  This is a simple mind map that can be followed when considering the obligations of a Strata Manager.

To Advise:
When the strata manager becomes aware of a problem, their first and most fundamental obligation is to advise the Executive Committee.

To Inform:
Many agents think that advising the Owners Corporation abrogates them of any obligations to do anything else. Some think that to tell them of the problem is enough. It is the second obligation to inform which is vital.  It is the obligations of the strata manager to provide sufficient iformation to the Executive Committee so that the Executive Committee can make an informed choice. This may require the obtaining of quotes or expert opinions to ensure that the Executive Committee have sufficient information to make the best decision possible. If the Executive Committee decides not to do something after they have been advised and informed of the appropriate action, the Executive Committee takes responsibility.

To Select:
It is the obligation of the Strata Manager to select the appropriately qualified, skilled and insured person.  Once the Executive Committee approves work to be done, it is incumbent on the Strata Manager to ensure that the person has the requisite qualifications to do the job.  The fact that somebody has a licence is not enough! Just because somebody has a licence, does not mean they can do the job well!   It is incumbent on the Strata Manager to undertake sufficient checks to ensure that the qualified person can do the job.  This is why strata managing firms have panels.  These panels allow the Strata Manager to identify who is good and to select people who have a proven track record.  All new persons on that panel should have reference checks undertaken to ensure that the person can do the job.

Finally, the strata manager must always pick a person who has the appropriate insurance, for example, public liability insurance of a minimum of 10 million dollars and workers compensation where applicable.  If it is an expert or professional, you should also ensure that they have professional indemnity insurance.

To Arrange:
It is incumbent on the Strata Manager to ensure that all work is arranged expeditiously. It is not enough to merely select the right person, it needs to be done in the right period of time.  If it is urgent work, the right person selected needs to do it urgently.

As noted above, these are general principles.  If followed in normal circumstances, it will protect the Strata Manager.  If there are issues of work which are dangerous, the Strata Manager should do everything in his/her power to convince the Executive Committee to approve the work.  There are circumstances that will arise which will call for different things to occur, however this is a very simple starting point to teach your staff.

It is good to do the work!  And it is even better to also be protected!

Until next time Bailey Compton and the team from Leverage Australia and The Australian College of Professionlas.

They’ve Got It All! It’s not an Aprils Fool’s joke!

I received a phone call from one of my mates in the industry.  It was the day after April fool’s day.  He said that on April fool’s day he had been out on property inspections and found that a tenant had taken it all.

On arriving at the premises, the Real Estate Agent found that the key did not turn the lock. The tenant had changed the locks on the door. Believing that the tenant had done a runner, he obtained access.  As his lawyer, I did not want to know how he obtained access.

His inspection report revealed the following:
• No stove;
• No range hood;
• No dryer;
• No washing machine;
• No laundry tub;
• Curtains missing;
• Missing light fittings

Yes, the tenant had taken the lot. They had not only moved out their own stuff but had taken a whole pile of the landlords stuff as well.  They not only abandoned, but they had taken.

The agent rang his property manager to advise of the fact. She would not believe him, thinking that it was an April fool’s joke. He pleaded for some period of time before she actually believed that this was no April fool’s joke.
As funny as this seems to the outsider, it was no joke to the landlord. Not only did the tenant leave in arrears, leave the place in a mess, but had depreciated the asset. Thankfully, the agent had talked all of his landlords into getting landlord insurance.  The insurer payed:
• For all rent in arrears;
• The rent for the vacancy period;
• The replacement of all the white goods; and
• The fixing up of all damage to the property.

The landlord is now laughing. Not only is the place decked out, he can commence to claim for the depreciation on his tax.

This is a timely reminder of why landlord insurance is absolutely vital to any person who is renting out their property.  Do we think the agent has a responsibility to advise on landlords insurance.  Yes!

Insurance is a financial product and can only be sold by persons who have an Australian Financial Services Licence or is an authorised representative under an Australian Financial Services Licence.  This means that agents are not permitted to sell the insurance or to provide any advice as to what products should be taken. Nevertheless, we believe it is encumbrance upon the agent to advise their landlord that they should obtain insurance.

Real estate agents have a duty of care to ensure that a landlord’s property asset is protected. The principles set out in Donoghue and Stevenson, state that the real estate agent must take all reasonable steps to avoid any harm which they could reasonably foresee.  It is foreseeable that a tenant may do damage to a landlord’s property and may not pay the rent.  The only reasonable steps in relation to preventing any damage which could occur from this consequence is by taking out appropriate insurance. Hence, we believe it is a reasonable step that an agent must take to avoid the foreseeable harm that a tenant could bring to a property is to recommend the obtaining of appropriate insurance.

To give you insurance, you should recommend it.

 

Bailey Compton & the team at Leverage Australia & The Australian College of Professionals.

Land Usage!

Australia acquires its principles of land from England.  It is neither the European system, nor complies with Indigenous Cultures.  It is clearly identifiable as Anglo-Saxon. 

English law focuses on a persons right to use land.  People buy it, lease it, obtain licenses etc. for the pure purposes of using the land for a specified objective.
The laws of this State are being clearly refined to focus on this concept of land usage, and exist within a layered level of controls which identify how a person can use a piece of property and for what purpose that property can be used.

In 1979, the Environmental Planning and Assessment Act was enacted.  This Act set up three layers of policy planning for New South Wales:
• State Environmental Planning Policy (SEPP)  – was a policy that was made by the State Government and relates to all of NSW.
• Regional Environmental Planning Policy (REPP) – Regional policies made by the State Government that are specifically designed for the development of a region of NSW.
• Local Environmental Planning Policy (LEPP) – these are policies made by the Local Council for the Council Precincts.

All these planning policies are drawn together to create a single plan for every property in NSW.  It culminates in what we now commonly refer to as “Zoning”.   Each local council will give a property an identified zoning.  This zoning will set out what the property can be used for.
The zoning requirements per specific area are set out in a Section 149 Certificate under the Environment Planning and Assessment Act 1979.  These are referred to as Section 149 Certificates.  Among other things, the Certificates will set out:
• what the property can be used for without consent;
• what the property can be used for with consent; and
• what the property is prohibited  from being for.
These zoning requirements are meant to be used as a basis for council decisions.  Before any property can be built or any commercial venture can be established, a development approval application must be lodged with the local council.  The development determination made by council must exceed the various planning policies.  They can be narrower than the planning policies but can not be wider.

When a strata complex is built, it has an attached development determination.  In many cases, there are a number of development determinations, whether made by local council or the Land and Environment Court, that are associated with these buildings.

The bi-laws can further define the use of a strata building.  Bi-laws can give exclusive use, can provide that a specific lot be used for a specific purpose or can prohibit activities from the Strata complex.  These bi-laws cannot exceed the development determination.  Yes – it can be narrower but cannot exceed it.

There is a final layer to this usage equation.  An individual lot owner can define how a tenant uses a property under a lease.  All commercial leases set out the use of a commercial unit.  Under a residential tenancy agreement, the landlord can restrict the usage of that premises.

These four layers of laws will identify how a specific unit can be used.  In relation to strata, it is generally only the first three layers which are important for a Strata Manager or Community Title Manager to understand.  Strata Managers and Community Title Managers need to consider what needs to be put on file so that they can understand how their complex is to be utilised.

Until Next Time Bailey Compton The Team at Leverage Australia & The Australian College of Professionals.

LICENSEES-IN-CHARGE!! ARE YOU REALLY WATCHING??

An emerging trend in the industry is stealing from the Trust Account.   Statistics coming from the Office of Fair Trading demonstrate that Trust Account defalcation is on the rise.  Defalcation is where money has been taken out of the Trust Account without authority.  What is even more frightening is that it is not those who control the Trust Account who are the thieves.  The emerging trend is for employees or business partners to have “touched up” the Trust Account.
In the first quarter of this year, Leverage has worked with three clients where employees, fellow directors or family have manipulated the Trust Account so that money ends up in their personal account.  On all occasions, these people were trusted, good operators and what can only be called “good people”.

Fears associated with the financial holocaust are probably at the root of this problem.  People who are struggling with the most basic problems of paying their rent, credit card or just to put food on the table, have created the class of good people who do bad things.

Section 31 of the Property, Stock and Business Agents Act 2002, requires the Licensee-In-Charge  be appointed for every corporation and every place of business.  Section 32 goes on to require the Licensee –In-Charge to demonstrate proper supervision.  Proper supervision is not fully defined but is outlined in Section 32 to include:
a. the Agency having a policy manual;
b. the agency having mechanisms to ensure the policy manual is followed; and
c. oversight of staff.

The Licensee-In-Charge bares the total responsibility for ensuring that staff comply with laws.  George Bushman’s disqualification from holding a licence in 1998 is clear evidence of the burdens placed on Licensees-In-Charge.  George was a licensee of 35 years experience who engaged a hot property manager.  The property manager was not just hot in terms of her performance but was a quote “hot chick”.  George was captured with her charm and influence and merely followed her instructions on the signing of cheques.  Among the many cheques that George had signed, $164,000 over a period of time, went to the “hot chick”.

The comments from the Magistrate in the Licensing Court were interesting to say the least.  The Magistrate indicated that George was an “honest” man, but lacked the “ability” to oversee his staff.  The Magistrate believed that it was a fundamental obligation of a licensee to be able to oversee staff.  It was not George’s dishonesty that caused the problem, but his inability to protect the Trust Account against staff.  George lost his real estate licence for three years. Unfortunately, the cost of running the case and loss of family, friends and reputation, culminated in George  never returning to the industry.

Licensees-In-Charge – it is your responsibility.  To merely sign off reconciliations and trial balances at the end of the month, or just sign cheques as presented by staff, may leave you in a vulnerable position.  We suggest the following:
• Examine your reconciliations and trial balances before signing;
• Undertake a bond reconciliation each month to ensure that all bonds have been lodged.   A bond reconciliation requires that the licensee in charge looks at the numbers of bonds that should have been lodged against those that have been lodged with the Rental Bond Board.  This can be done by simply checking the number of residential properties listed on your practice data base against a print out from the Rental Bond Board.
• Investigate arrears.  Always check the under 14 day arrears.  The best place for a person to take money on rent is where the tenant would never know about it.  If the rent arrears are below the 15 day limit, the tenant will never find out about their rent being siphoned off elsewhere. Investigate a cross section of these properties to ensure that money is not disappearing.
• Do random checks.  On an irregular basis, licensees should look at 5 to 10 deductions from the trust account.  The agents should investigate what authority exists to take that money; who the money went to and the simple check through to the bank to ensure that the money has gone to that destination.
This is not foolproof.  No system is foolproof because criminals for years have been able to outsmart everyone.  If you are a Licensee-In-Charge who is a sales person and does not like paperwork, employ a book keeper who is capable of doing this for you.  If you do employ a book keeper, sit with them on a monthly basis to do what we said above.

It is your license!  It is worth protecting!

Until next time Bailey Compton & The team at Australian College Professionals

Strata For Dummies

I would love to get a dollar for every time a person said to me that consumers are more educated today than ever before.  For each of these dollars, I would like to double the bet that consumers are no more educated today than ever before.  In actual fact, they are wrongly educated and have little information to help themselves.

The Office of Fair Trading publishes an excellent guide on Strata Living.  This guide summarises all the obligations of the Owners Corporation, the rights of lot owners and an explanation of how the Strata Schemes Management Act 1996 operates.  This is accessible to anyone and should be used as a good guide for executive committees and for lot owners.  We have recently heard a story which demonstrates the folly of believing that education does have an impact.  At an annual general meeting of a prestigious apartment block in Sydney, the budgets and the financial reports were totaled.  An angry person from the floor asked the following question: “I would like to ask the Strata Manager whether the Owners Corporation has a bank account”.

The Strata Manager looked at the building manager in total disbelief.  The lot owner then reiterated their question.  The Strata Manager asked what did she mean by “does the Owners Corporation have a bank account”.  The lot owner responded that “all I want to know is whether the Owners Corporation has a bank account in its own name”.  Obviously, the Strata Manager answered in the affirmative.  She then noted that “There is nothing in the financial reports to show what the number of the bank account is”.  I believe the discussion continued on in this manner for some thirty minutes.   There was a perfect opportunity for this chairman to ask the lady to sit down and trust that there was a bank account.  One of the retorts

from another lot owner was “How can we pay the accounts if we don’t have the bank accounts”.  The lady was still confused when sat she sat down not believing that there was any evidence of any bank account in existence at all.  She was led to believe that the Strata Manager or Building Manager held the money in their own account.
I would to be able to tell you that Leverage has got an answer to these problems!  We would also like to tell you that we have got a strategy to deal with such lot owners!  But we can’t.  There is nothing we can tell you that will allow you to deal with real dummies.  We are currently developing a course for executive committee members, however, if people do not have the IQ to understand, there is nothing that anyone can do.

When you sit down today and whinge about your lot owners, feel for the Strata Manager with his belligerent, rude, arrogant, self opinionated lot owner who doesn’t even believe that the Strata has a bank account. 

If you have any funny stories regarding your Strata, please don’t hesitate to tell us. We love to pass on the funny stories so that we can place them on our blog for people to read.  If we don’t laugh at the things which may make us cry……… psychologists may be the only answer.

Until Next Time

Bailey Compton & the Team at Leverage Australia & The Australian College of Professionals

New Sec 149 Certificates

From the 27th February 2009, there have been new requirements for local councils in relation to the issue of Section 149 Certificates under the Environmental Planning and Assessment Act 1979.  Local councils will be required to put extra information on 149 Certificates that they did not have to do prior to 27th February 2009. Mostly, this information is only important for real estate agents to know, except with regards to how it impacts on exchanges for Contracts for the Sale of Land.
The Conveyancing Act 1919 requires that a vendor must prepare a Contract for the Sale of Land before exchange.  For a Contract to be valid, a number of prescribed documents must be attached.  One of those prescribed documents is a Section 149 Certificate.
Come the 28th February 2009, 149’s that are attached to existing marketing contracts will be out of date. Any contracts that are exchanged with the old 149 Certificates will mean the contract is not valid. Agents out there participating in exchange of contracts should be extraordinarily careful because the exchange may be flawed because of the old 149 Certificate being attached.
Obviously, the risk is lower for those exchanging on Private Treaty than on Auctions.  For those on Private Treaty, there is a 5 day cooling off period during which time the vendor can rectify the problems.  Nevertheless, if you exchange and the purchaser rescinds, the 0.25 may not be payable.  The agent may become liable for this payment to the vendor.

In relation to auctions, or exchanges by real estate agents with 66W’s attached, we would suggest that you also be extraordinarily careful in relation to old 149 Certificates.  If the issue date on your 149 Certificate is not dated 27th February 2009 or later, we would suggest that you do not exchange the contract until the vendor’s solicitor has provided you with a new 149 Certificate.
Some solicitors are belligerent and do not want to give you a new certificate because their clients, your vendors, are not wanting to spend the extra $44.  If they will not give you a 149 Certificate, only exchange under the solicitors written authority.  Protect yourselves and let the solicitors make the decision.

Until Next Time

Bailey Compton Leverage Australia & The Australian College of  Professionals

Strata’s Little Helpers

The Strata Schemes Management Act 1996 (SSMA)  has a simple political system:
• Every lot owner has a vote;
• Lot owners meet annually to vote on the Executive Committee;
• The Executive Committee then elects the Chairman, Treasurer and Secretary.

The SSMA provides for the executive committee to be as small as one person and as large as nine people.  It accepts however that many owners corporations do not have the experience to be able to undertake the functions as required by the SSMA. The SSMA has therefore provided for four types of helpers:
• The Executive committee may co-op persons onto the Executive Committee to assist.
• Section 13 of the SSMA permits the Owners Corporation to employ people to assist them to undertake their functions.
• Section 28 of the Act empowers the Owners Corporation to delegate its functions to a Strata Managing Agent.  Section 26 requires the Strata Managing Agent to be licensed as a Strata Managing Agent under the Property, Stock and Business Agents Act 2002 (PSBAA).
• Part 4A of the SSMA states that the owners corporation can engage a caretaker to maintain the common property.  The caretaker agreements have a maximum duration of ten years.

The SSMA requires that a strata managing agent can only be appointed pursuant to a written delegation of the owners corporation.  Unfortunately, because section 26 requires that a person hold a licence under the PSBAA, the Strata Manager must also comply with Section 55 of that Act.  Section 55 requires that to be remunerated, a Licensed Strata Managing Agent must have an agency agreement in writing that complies with the Regulations.

The industry has standard agency agreements and we do not intend to cover this ground. Suffice to say that the agency agreement that is used in the industry at the moment couples as delegations.

The distinction between the duties of a Strata Manager, Caretaker and those appointed pursuant to section 13 are somewhat clouded.  The question often arises about when a person needs to hold a licence.  In the case of Owners Corporation SP56443 v Regis Towers Real Estate, the issue of delegation was considered.  In simple terms, Justice Hodgson stated that a person required a strata managing agents license when they received delegated powers.  Delegated powers are when the owners corporation relinquished authority to make decisions in relation to their functions. It was argued by Justice Hodgson that a Licensed Strata Manager has the power to conduct certain functions without recourse to discussion with the owner’s corporation.  A person who is assisting or is appointed as a caretaker should not be able to do anything without authority.  They may make decisions as to how they carry out their functions, but they cannot make determinations about the functions themselves.

Part 4A was introduced in 2003 as a means of resolving this problem. It was meant to clearly define the difference of a Caretaker and a Licensed Strata Manager.  It has not unfortunately because many Caretakers are still receiving delegated power. It is a matter which is now starting to rear its head.

Interestingly enough, amendments were moved so that owners corporations could dismiss unconscionable Caretakers with ease. What is interesting is that no cases have been heard under Part 4A since the inception of that amendment.  Maybe, just maybe, Parliament got it wrong, because they were focusing on the wrong issues.

 
Until next time

Bailey Compton and the team at  Leverage Australia & The Australian College of Professionals.

Take Note! “Your Protection Receipt”

I have just completed reading the case of Zhang and anor vs VP 302 Pty Limited.  It is a case that I will talk more about in the future concerning its impact on the real estate industry.  In short, the purchasers had bought a property in Green Square for $1,070,000.  They paid a deposit of $107,000 and did not complete on the purchase. The purchaser had claimed among other things that the agent had misled them in a number of regards. In particular, they claimed that the agent had misled and deceived them in relation to the potential for the increase in value of property.

The purpose of this newsletter is not to tell you not to mislead and deceive, even though it is a message that you should consider, but to tell you about what protections an agent should put in place. The purchasers made a number of claims about what the agents had said.  In the main part, the agent refuted these claims, and said that they had never said anything of the kind.  It was the husband and wife purchasers against the single agent.

Justice White indicated that the credibility of the plaintiffs suffered from some of the statements they had made during the court hearing.  Justice White was also not happy with the sales representative because of her inability to support her statements.  In reading the case, it became apparent that the sales representative’s
recollections were generally accepted as being correct.  Except in some crucial points, Justice White believed the sales representative over the purchasers.

It got me thinking regarding how the sales representative could have better defended herself.  She had nothing to prove what she had said to the purchasers. She had nothing from that time which could not be altered, that could be used to assist her case. 

In our training sessions, Rosy Sullivan and I, together with all our other trainers, have for some time preached about the use of diaries, specifically hardcopy diaries.  Leverage has in its own practice altered the practice of using diaries.  Leverage has moved from the use of diaries to notebooks, because we believe it gives greater protection.  It is a standard notebook that can be obtained from any stationer. It obviously has lines to write on, but does not have a day per page. Our solicitors rule off each day and start the next day with its date and takes continuous notes regarding what has happened over the day. We focus on who we have spoken to, who was there when we spoke to them, the time and what was said.

Notebooks are brilliant in terms of evidence. The police have been using notebooks for decades and the courts are in the habit of accepting police notebooks. What is most important is that notebooks cannot be altered. If you are taking continuous notes, you cannot alter a notebook. Hence, a court will always accept the notes that you made at the time as being honest and accurate of what was being said. Although we were not there when the purchasers were spoken to in the case mentioned above, we do believe that if the sales representative had written notes regarding what she had said, she would have been believed by the courts and would have been exonerated.

 

Notebooks also have the advantage of keeping a record of every person the agent talks to. It is a great way of setting up a database and will naturally assist the sales process.

This notebook could be your “protection receipt”. We urge you to consider the implementation of a notebook as soon as practical in your agency practice.
Until next time

Bailey Compton and the team at  Leverage Australia & The Australian College of Professionals