A reminder to regularly health check: governance, compliance and operations

A reminder to regularly health check: governance, compliance and operations

On 22 May the Australian Prudential Regulation Authority (“APRA”) released an information paper on self-assessments of governance, accountability and culture performed by 36 financial institutions to whom APRA wrote and who provided those assessments back to APRA. The self-assessments were requested in response to the May 2018 Final Report of the Prudential Inquiry into the Commonwealth Bank of Australia (CBA). That report found there was not a strong drive for improvement of internal governance, compliance and operations during periods of financial success.

The purpose of yesterday’s paper was to provide institutions with a self-assessment process as an opportunity to strive for improvement and to report on the results. The outcome was somewhat “disappointing” according to APRA.

In short, the culture of a “light touch” approach to operations, compliance and governance is well and truly alive, the weaknesses associated are known and those weak processes are still continuing. Specifically, the self-assessments highlight:

  • non-financial risk management requires improvement;
  • accountabilities are not always clear, cascaded and effectively enforced;
  • acknowledged weaknesses are well-known and some have been long-standing; and
  • risk culture is not well understood, and therefore may not be reinforcing the desired behaviours.

What do you need to ensure?

Overall, complacency must be avoided to avoid penalties, financial loss because of poor risk assessment and to avoid a culture of blaming legal requirements as the reason for slowed financial gain. Such a culture can lead to rushed processes, overlooking of critical legislative requirements and dissatisfied customers.

We have formulated some points for you to consider/check off here: Governance checklist

What does APRA’s reminder mean for you?

If you are a financial service provider, lender, insurer, superannuation provider – it means you will likely come under greater scrutiny as APRA continues their regulatory practices. You should take the time to consider the APRA’s comments and to consider if you are compliant. A copy of the paper can be found Here.

For any person or entity who does not fall under APRA’s regulatory reach, the report is nevertheless a reminder that regulators are cracking down and you might be required to satisfy more conditions to obtain funding.

Greater regulatory measures are not necessarily more onerous, but they can be if you are not prepared with the relevant documents or policies in place.

What can JHK Legal do?

We can:

  1. review your current policies/processes and provide you advice on what needs to be amended/updated or considered;
  2. provide pinpointed advice on a specific issue which might be one of the points in our checklist in the above link;
  3. draft relevant documents at a fixed fee price;
  4. provide you with some comfort to ensure you are taking steps to improve, and help you along the way.

If you would like assistance getting prepared or if you have any questions, please contact JHK Legal on (02) 8239 9600.

Written by Lawyer, Shannon McCarthy


Changes to the Real Estate Award

On 1 May 2019, the Fair Work Commission (“FWC”) issued a notice to implement a two-stage process for changes to the Real Estate Award (“the Award”) which will impact how commission-only payments for salespersons (in real estate) apply and who they apply to. These changes will affect employers and employees alike.

Phase 1 Changes

As of 30 April 2019, the FWC has amended the pre-requisites for employees in the real estate sector who are able to be employed as part-time commission-only employees. The old pre-requisites provided that an employee had to, amongst other requirements, be an active licensed real estate agent. This requirement has now been amended to require the employee to operate his or her own real estate business. This change will require employers to ensure that employees who do not meet the new requirements to qualify as a part-time commission-only employee are reviewed and their wages are adjusted in line with the Award. When considering what constitutes the operation of their own real estate business, a definition of a real estate business has been provided by FWC as “a business involved in the sale of real property or businesses”.  The FWC has introduced these amendments to clarify the coverage of part-time commission-only employment.

Phase 2 Changes

As of 30 June 2019, employers in the real estate sector will no longer be able to employ part-time employees as commission-only salespeople. There are no “grandfathering” rules with regards to the amendment, which means the amendment will affect all current part-time commission-only

employees as opposed to only affecting any new part-time commission-only employees gaining employment after 30 June 2019. The impact of this amendment will be that all part-time commission-only employees must be transitioned onto hourly rates provided by the Award.

Impact of the amendments

The largest impact on employers and employees will be the upcoming 30 June 2019 amendments which alter payment structures for part-time commission-only employees. Employers need to ensure they comply with the amendments within the first pay cycle on or after 30 June 2019. If employers fail to comply with the amendments to the Award, this may give rise to disputes over underpayment of wages.

How to ensure compliance with the amendments

Employers should review the employment contracts of any part-time commission-only employees prior to 30 June 2019 to ensure they are fully informed as to which employees are affected by the amendments. The amendments constitute an automatic rollover, with no transition period, onto hourly rates provided by the Award. Employers need to be aware that even if employment contracts are not immediately updated, they are still required to pay part-time commission-only employees in line with the Award’s hourly rates from 30 June 2019.

If you would like further information, assistance with preparing new contracts or are concerned you may be affected by the amendments to the Award, please contact JHK Legal on 02 8239 9600.


Written by Lucy Carroll, Lawyer

Update on Statutory Demands – why accuracy is critical

A recent decision from Victoria is a timely reminder of the importance of accuracy and, noting the seriousness of noncompliance with a Creditor’s Statutory Demand For Payment of Debt (statutory demand), why the courts are strict when it comes to correct service of statutory demands.

Judicial Registrar Matthew found in  Mills Oakley (a partnership) v Asset HQ Australia Pty Ltd [2019] VSC 98 that the statutory presumption of insolvency did not arise as there had not been effective service due to a typographical error in the postal address of the recipient company.

Statutory provisions and presumptions

A winding up application was brought against Asset HQ Australia Pty Ltd (Company) due to alleged noncompliance with a statutory demand said to have been served to the Company’s registered office by post.

Section 459C(2)(a) of the Corporations Act 2001 (Cth) (Corporations Act) provides that a company is presumed insolvent if it has failed to comply with a statutory demand. Taking that one step back, the company must have been served with the statutory demand before there is something to comply with/not comply with.

Section 109X of the Act and s28A of the Acts Interpretation Act 1901 (Cth) (Acts Interpretation Act) states that a document may be served on a company by posting it to the company’s registered office.  Pursuant to section 160(1) of the Evidence Act 2008 (Vic) and section 29 of the Acts Interpretation Act, service of a document sent by prepaid post is deemed effective on the fourth working day after it is posted, unless there is evidence raised to the contrary.

The dispute

In this matter, the Company’s registered office address included ‘1 Pacific Highway’. In a very unfortunate set of circumstances, the individual that typed out the Company’s registered address on the envelope that included the statutory demand to be served typed “Pacific Way” instead of “Pacific Highway”.

The Company disputed service, alleging that the mailroom at the registered office never received the statutory demand.

The creditor’s solicitors submitted that the statutory demand would have been delivered despite this “immaterial” [30] typographical error on the envelope and that it had not been returned to sender. It sought to rely on evidence that Pacific Highway was the only street in the postcode 2060 which contained the word ‘Pacific’ and that Australia Post had informed the solicitors:

“if a pre-paid postal item could not be delivered that the postal worker would endorse the item “return to sender” if there was a return address provided and that a postal return item would be delivered in the ordinary course of post.” [13]

The Company argued that service had not been complied with and therefore the creditor could not rely on the presumption of service in section 29 of the Acts of Interpretation Act because the envelope was not “properly addressed” [48].


Judicial Registrar Matthews cited a number of authorities as well as the well-known text of Farid Assaf when coming to the decision that the statutory presumption of insolvency did not arise as there had not been effective service due to a typographical error in the postal address.  It was put quite simply when Judicial Registrar stated:

“The plaintiff’s repeated submission that there was no ‘material difference’ or ‘practical difference’ between “Way” and “Highway” in this case was not to the point: “Way” was not the Registered Office and that is the end of it. [55]

Such a simple error had such serious consequences for this creditor.

JHK Legal have an experienced litigation and insolvency team that pride themselves on accuracy and being up to date with the latest decisions. If you need assistance with statutory demands or the recovery of funds generally, please contact our office.


Written by Alicia Auden, Legal Practitioner Director