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Electronic execution of deeds by individuals

The long-standing position at common law has been the formality that a deed must be written on parchment, vellum or paper. Accordingly, it has been widely accepted that a deed cannot be made electronically.

The first key change to this position was in 2018 when the New South Wales (‘NSW’) government amended the Conveyancing Act 1919 (NSW) to include s 38A to authorise a deed to be made and signed in electronic form. However, as explained below, this change has had limited application until recently.

Given COVID-19 developments, states and territories across Australia have been passing their own unique legislation to allow for more documents, especially wills and powers of attorney, to be signed and witnessed electronically.

Note also on 22 May 2020 Queensland passed the Justice Legislation (COVID-19 Emergency Response—Wills and Enduring Documents) Amendment Regulation 2020 (QLD) which amended the Justice Legislation (COVID-19 Emergency Response—Wills and Enduring Documents) Regulation 2020 (QLD) to allow for, among other things, deeds to be made electronically. The Queensland regulations are quite extensive and do not lend themselves to a succinct summary here. Accordingly, we only summarise the position in NSW and Victoria in this article.

It is possible that other jurisdictions may still pass legislation to allow for deeds to be signed and witnessed electronically and the status of each of these jurisdictions should be carefully monitored.

Broadly, the legislation only has temporary application, with the authorisation only lasting until 24 October 2020 in Victoria, and 22 October 2020 in New South Wales (with the exception of s 38A of the Conveyancing Act 1919 (NSW) which has ongoing application).

This article focuses on the execution of deeds by individuals (as compared to contracts and other documents). We have prepared a separate article on the execution of deeds by companies (refer to ‘Electronic execution of deeds by companies’ article under related articles below).

New South Wales position

NSW has for some time allowed deeds to be made by individuals via technology (see s 38A of the Conveyancing Act 1919 (NSW)). However, uncertainty regarding witnessing that limited the spread of this practice.

On 22 April 2020, the NSW government made the Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (NSW) which inserted Schedule 1 into the Electronic Transactions Regulations 2017 (NSW) (‘NSW Regulations’). Broadly, the NSW Regulations authorise signatures on deeds and certain other documents to be witnessed via audio-visual link until 22 October 2020.

Under the NSW Regulations, for electronic witnessing to be effective, the witness must:

  • observe the person signing the document (the signatory) in real time; and
  • attest or otherwise confirm the signature was witnessed by signing the document or a copy of the document; and
  • be reasonably satisfied the document the witness signs is the same document, or a copy of the document signed by the signatory; and
  • endorse the document with a statement:
    • specifying the method used to witness the signature of the signatory; and
    • that the document was witnessed in accordance with the NSW Regulations.

The NSW Regulations expressly state that the requirement for the presence of a witness, in an Act or another law is taken to be satisfied if the witness, signatory or other person is present by audio-visual link.

Victorian position

On 12 May 2020, the Victorian government made the COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020 (Vic) (‘Vic Regulations’), which amended provisions of the Electronic Transactions (Victoria) Act 2000 (Vic) to permit for electronic signatures and witnessing of deeds and certain other documents by audio-visual link until 24 October 2020.

The Vic Regulations modify the definition of a transaction to include, among other things, transactions in the nature of deeds.

Section 9(1) of the Electronic Transactions (Victoria) Act 2000 (Vic) provides:

If, by or under a law of this jurisdiction, the signature of a person is required, that requirement is taken to have been met in relation to an electronic communication if—

(a)    a method is used to identify the person and to indicate the person’s intention in respect of the information communicated; and

(b)    the method used was either—

(i)      as reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in the light of all the circumstances, including any relevant agreement; or

(ii)    proven in fact to have fulfilled the functions described in paragraph (a), by itself or together with further evidence; and

(c)      the person to whom the signature is required to be given consents to that requirement being met by way of the use of the method mentioned in paragraph (a).

The Vic Regulations confirm that the other party’s consent is required for documents to be signed electronically. Interestingly, the Vic Regulations inserted s 9(1A) in the Electronic Transactions (Victoria) Act 2000 (Vic) which provides:

The fact that a person proposes to use a method referred to in subsection (1)(a) involving an electronic signature is not of itself sufficient reason to refuse to give the consent referred to in subsection (1)(c).

It appears that this was included to protect parties who wish to sign electronically from having their request refused without a valid reason. For example, some parties such as suppliers and financial institutions may still seek to insist on traditional execution rather than having to carefully scrutinise whether a deed executed electronically satisfies the relevant criteria to ensure it is legally effective. This aspect is likely to impose extra costs on the counterparty who may not wish to execute or may seek to have the cost of their legal advisers approved (who may be instructed to review the electronic deed) before they will execute electronically.

The Department of Justice and Community Safety Victoria posted an article (linked below) on the Vic Regulations and provided the following guidance for signing a document electronically:

You can electronically sign a document in a number of ways including signing a PDF on a tablet, smartphone or laptop using a stylus or finger. Where an electronic signature is used the person signing must write or stamp under their signature a statement indicating that the document was electronically signed in accordance with the Regulations.

An example of a valid statement is:

This document was electronically signed in accordance with the COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020.

Note that witnessing is not a strict legal requirement for deeds that are made in Victoria. This leaves open the question as to whether a deed made electronically should be witnessed. Our view is that while this is not a legal requirement, it is best practice to have a witness attest to the execution of a deed as most people expect this to occur. However, a deed remains valid in Victoria despite there being no witnesses.

The Electronic Transactions (Victoria) Act 2000 (Vic) also requires the witness to write a statement that indicates that the deed was witnessed by audio-visual link in accordance with the requirements. In the absence of this statement, the requirements are not taken as being met. The Department of Justice and Community Safety Victoria provided the following as an example of a valid statement:

This document was witnessed by audio-visual link in accordance with the COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020.

While not expressly stated in the Vic Regulations, a witness attesting to the execution of a deed electronically should be satisfied of the following:

  • the identity of the signatory; and
  • that the signatory has decision making capacity; and
  • that there is no defect such as undue influence, duress or unconscionable conduct apparent in the transaction; and
  • that the signatory is signing freely and voluntarily.

The Vic Regulations also authorise deeds to be signed and witnessed in counterparts.

Regulation 12(4) of the Vic Regulations provides:

None of the following circumstances prevents those requirements from being taken, under section 9(1) of the Electronic Transactions (Victoria) Act 2000 (Vic), to have been met—

(a)      some of those signatures appearing on only some of the copies of the document; or

(b)      there being a copy on which not all the signatures appear; or

(c)      there being no copy on which all the signatures appear.

The requirements are taken to be met, so long as every signatory or party whose consent is required under the Vic Regulations, receives every copy of the document on which a signature appears. This overcomes the need for each party to sign the same document.

When making a deed electronically, any copy, counterpart or electronic document must include the entire contents of the document (ie, not simply the execution page). Advisers who seek to take short cuts by merely putting in front of a client the pages that require signing, might render that document ineffective.

Should you make a deed electronically?

SMSF, trust and similar deeds form an integral part of people’s retirement, estate and succession plans. Accordingly, care should be taken when making a deed electronically so that it is legally effective.

If you seek to make a deed electronically, it is vital that you comply with all the requirements of the jurisdiction in which the deed is being made. Currently, NSW, Victoria and Queensland are the only Australian jurisdictions where this can be done. Other jurisdictions may still introduce similar changes. As noted above, failure to comply with the formalities can result in a deed being ineffective with consequential risk exposure.

Of course, those who make a deed electronically can, and arguably should, go above and beyond what is required by the regulations. For example, parties may wish to record the audio-visual link to refer to later on just in case the deed is ever challenged. Detailed file notes, copies of identities, time records, etc, should also be made; especially if an adviser is involved. Furthermore, parties may choose to sign a hardcopy and then scan and send it to the next party to sign and/or witness whilst maintaining an audio-visual link.

Care should also be given to ensure that the documents being signed and witnessed electronically are drafted in a manner that meets the relevant requirements. There are many document suppliers who are still supplying out of date documents and are not capable, nor qualified, to provide this type of service.

Electronic execution of deeds by companies

Please refer to the ‘Electronic execution of deeds by companies’ link under related articles below.

How can DBA Lawyers help?

In addition to providing the best quality documents, DBA Lawyers supplies detailed guidance explaining, among other things:

  • how to execute a deed electronically –– for both individuals and companies;
  • the criteria to follow in each jurisdiction to execute a deed correctly; and
  • the steps that should be taken to minimise risk including the wording to use when signing or witnessing electronically.

We will be monitoring developments and updating this guidance as needed to keep our clients at the cutting edge.

If any further assistance or advice is required, we would be pleased to assist.

Conclusion

The electronic execution of a deed by individuals can occur in Victoria and NSW for a temporary period that ends on 24 October 2020 in Victoria and 22 October 2020 in NSW.

You should await specific legislation before seeking to execute a deed via electronic execution in any other jurisdiction.

Companies that are a party to a deed should have an up to date constitution that expressly empowers electronic execution of documents to minimise risk. For information on DBA Lawyers’ constitution update service, please click here.

A full version of the deed should be made available to each party before and at the time of execution.

Related articles

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This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.

Note: DBA Network Pty Ltd hold a range of SMSF CPD training online. The next live SMSF Online Update webinar is being presented on 5 June 2020. For more details or to register, visit www.dbanetwork.com.au or call Natasha on 03 9092 9400.

By Daniel Butler, Director ([email protected]), Shaun Backhaus, Lawyers ([email protected]) and Zac Galloway, Lawyer ([email protected]), DBA Lawyers Pty Ltd

22 Juney 2020

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