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Electronic execution of deeds — is it here to stay?

Electronic execution of deeds — is it here to stay?Introduction

Since the beginning of the COVID-19 pandemic, legislators across the states and territories have been passing temporary legislation to allow for documents to be signed and witnessed using technology. At the date of this article, Victoria (‘Vic’), New South Wales (‘NSW’) and Queensland (‘QLD’) are still the only jurisdictions to make provision for deeds to be made electronically. We have previously covered these provisions in some detail and you can click here to read our guide on electronic execution of deeds.

The temporary measures are set to expire as follows:

  • Vic — 26 April 2021;
  • QLD — 30 April 2021; and
  • NSW — 1 January 2022.

For the jurisdictions that have passed legislation to allow for the signing and witnessing of deeds electronically, there appears to be some push to make these changes permanent.

Summary of the provisions

NSW had already passed legislation to allow for deeds to be made and signed electronically by amending the Conveyancing Act 1919 (NSW) in 2018. However, deeds in NSW require witnessing and the legislation did not cover for this. This created some uncertainty amongst practitioners as to how a deed could be made legally effective using technology for witnessing.

The Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (NSW) (‘NSW Regulations’) was made to allow for documents, including deeds, to be witnessed by way of audio-visual link (‘AVL’). This filled the gap in the law and allowed for deeds to be made entirely by way of technology in NSW.

Victoria introduced the COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020 (Vic) (‘Vic Regulations’) which temporarily amends the Electronic Transaction Act 2000 (Vic) to allow for electronic transactions to include the nature of deeds. It also included provisions for documents to be witnessed electronically. While witnessing is not a strict requirement for deeds in Victoria, our view is that it is best practice to have a witness attest to the execution of a deed as most people expect this to occur. Accordingly, it would be prudent for those witnessing deeds electronically in Victoria to follow the witnessing requirements contained in the Vic Regulations.

Queensland introduced the Justice Legislation (COVID-19 Emergency Response—Wills and Enduring Documents) Regulation 2020 (QLD) (‘QLD Regulations’) which was later amended by the Justice Legislation (COVID-19 Emergency Response—Wills and Enduring Documents) Amendment Regulation 2020 and more recently amended by the COVID-19 Emergency Response and Other Legislation Amendment Act 2020 and these must be read together. The QLD Regulations provide that an instrument still takes effect as a deed even if it is not written on paper, parchment or vellum. This is the only jurisdiction that has expressly included wording to deal with the position at common law, that a deed is written on paper, parchment or vellum.

The QLD Regulations also introduced provisions to deal with electronic witnessing of documents by AVL. While the QLD Regulations removed the requirement for a deed to be witnessed, as noted above, best practice is for a witness to attest to the execution of a deed.

The Federal Government temporarily modified the Corporations Act 2001 (Cth) (‘CA’) by introducing the legislative instrument the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 (‘Determination’) in May 2020. Among other things, the Determination provides relief for companies to execute documents electronically. The Determination has since been extended and is currently set to expire on 21 March 2021.

There has been some debate as to whether the Determination truly allows for companies to execute deeds electronically. While the Determination does not specifically deal with companies executing deeds, s 127(3) of the CA does state that a company may execute a deed if it is expressed to be a deed and executed in accordance with s 127(1) or (2). The major concern is that there is nothing in the Determination to expressly deal with the common law requirement that a deed be made on paper, parchment or vellum.

Our view is that a company should only execute a deed electronically as a last resort and only if the deed falls under one of the jurisdictions that has made legislation to allow for a deed to be singed electronically (ie, Vic, NSW and QLD). Further, we strongly recommend that a company should only execute a deed electronically if there are appropriate express provisions in the constitution to support this rather than relying upon the Determination.

Is electronic execution of deeds here to stay?

NSW recently passed the Stronger Communities Legislation Amendment (Courts and Civil) Act 2020 No 24 (NSW) which introduced Part 2B to the Electronic Transactions Act 2000 (NSW) to continue the witnessing and attestation of documents by AVL, including deeds, until 1 January 2022. The new Part 2B is referred to as the ‘Remote witnessing pilot scheme’.

The NSW Attorney General Mark Speakmen made a statement that the introduction of Part 2B is to allow additional time for the effectiveness of the measures to be assessed to determine whether the amendments should be made permanent. The statement suggests that the Remote witnessing pilot scheme could be here to stay.

If one or more jurisdictions allow for electronic execution and other jurisdictions do not allow for it this could cause some technical issues with respect to execution. For example, where multiple parties are involved or the governing law of the deed is not clear.

Because this legislation is not universal across Australia, those who wish to make deeds electronically may run into scenarios where it is not provided for under a particular deed and thus care should be taken before attempting to execute any deed electronically.

Other developments

In Victoria, the COVID-19 Omnibus (Emergency Measures) and Other Acts Amendment Act 2020 (Vic) recently passed which extended the provisions for deeds to be made electronically until 26 April 2021. It is uncertain as to whether the Victorian government only intends to extend these measures for the COVID-19 period or whether these provisions will find their way into permanent legislation. Only time will be able to solve that mystery.

In Queensland, the COVID-19 Emergency Response Act 2020 was recently amended by the COVID-19 Emergency Response and Other Legislation Amendment Act 2020 which extends the ‘COVID-19 legislation expiry day’ of relevant legislation to 30 April 2021 or another day prescribed by regulation.

Conclusion

It is uncertain whether these provisions will remain and whether the other jurisdictions will make the leap. There are many practitioners that are enjoying the ability to have documents signed and witnessed by way of technology. Whether this is the way of the future or just a temporary fix during the global pandemic, only time will tell.

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

DBA LAWYERS 

22 December 2020

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