Deeds are vital in the SMSF industry. The governing rules of SMSFs are almost always contained in deeds. Yet few people fully understand what a deed is and how to implement one. We run through some key rules that are often forgotten … even by lawyers!<\/p>\n
At common law, there are three formalities for an instrument to be deed (Scook v Premier Building Solutions Pty Ltd [2003] WASCA 263<\/a> [22]):<\/p>\n Sealing means affixing a wax or wafer seal, a rubber stamp or any other impression as a seal (Electronic Rentals Pty Ltd v Anderson (1971) 124 CLR 27<\/a> [18]).<\/p>\n Sealing is generally no longer literally needed in Australia. However, the position regarding sealing varies significantly. For example, in NSW if a deed is expressed to be a deed (eg, it says \u2018executed as a deed\u2019), it is taken be sealed. In Victoria, this is not sufficient, rather, the words \u2018signed, sealed and delivered\u2019 (or similar wording) are needed.<\/p>\n There are certain firms providing deeds who do not use wording such as \u2018signed, sealed and delivered\u2019. In states such as Victoria, failure to use such wording can cause the document to fail to be a deed.<\/p>\n \u2018Delivery means some conduct indicating that the person who has executed the deed intends to be bound by it\u2019 (Monarch Petroleum v Citco Petroleum [1986] WAR 310<\/a>, 355). Typically, this is evidenced by having the words \u2018signed sealed and delivered\u2019. However, some states have altered this.<\/p>\n The Corporations Act 2001<\/a> (Cth) has significantly altered the requirements where a company executes a deed. The prior discussion does not apply to companies.<\/p>\n Rather, for companies, under s 127, a document will be a deed, so long as it is expressed to be executed as a deed and it is signed by two directors, a director and a secretary or for a company that has a sole director who is also the sole secretary \u2014 that director.<\/p>\n The Corporations Act 2001<\/a> (Cth) does not cover a sole director who is not a secretary. Therefore, it is always best practice to also have a secretary.<\/p>\n At common law there is no requirement for witnessing. However, certain states and territories have passed legislation requiring it.<\/p>\n There is no requirement to date a deed in order for it to be valid (Brown v Innovatorone Plc [2012] EWHC 1321 (Comm)<\/a> [365]).<\/p>\n If a document fails the requirements set out here, it fails to be a deed. Unless the original deed provides otherwise, the default position is that only a deed can vary another deed (ING Funds Management Ltd v ANZ Nominees Ltd [2009] NSWSC 243<\/a> [72]\u2013[74]). Accordingly, if trying to vary the governing rules of the SMSF, if a document fails to be deed, the new set of governing rules typically fail to be implemented.<\/p>\n You never know in what jurisdiction a deed might ultimately be litigated. Therefore, it is best practice, where an individual signs a deed, to have:<\/p>\n Where a company signs, it is best practice for the company to have a secretary and for the words \u2018executed as a deed\u2019 to appear.<\/p>\n The below summarises the position in each Australian jurisdiction. DBA Lawyers ensure that all of their documents that need to be a deed meet the relevant requirements. This is often important when drafting SMSF deeds of variation.<\/p>\n Note: the position is different where companies execute deeds.<\/p>\n For further Information please contact:<\/p>\n DBA LAWYERS PTY LTD<\/strong> (ACN 120 513 037) Level 1, 290 Coventry Street, South Melbourne Vic 3205 DBA News contains general information only and is no substitute for expert advice. Further, DBA is not licensed under the Corporations Act 2001<\/em> (Cth) to give financial product advice. We therefore disclaim all liability howsoever arising from reliance on any information herein unless you are a client of DBA that has specifically requested our advice.<\/p>\n<\/div>\nDownload as PDF<\/a><\/span>\n","protected":false},"excerpt":{"rendered":"\n
Sealing<\/h3>\n
Delivery<\/h3>\n
Companies<\/h3>\n
Witnessing<\/h3>\n
Dating<\/h3>\n
What if a document fails to be a deed?<\/h3>\n
Best practice<\/h3>\n
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Summary<\/h3>\n
Requirements for individual (even in capacity, for example, as trustee) to execute deed<\/h2>\n\n
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\n\t \nState\/Territory<\/th> Sealing<\/th> Delivery<\/th> Witnessing<\/th> Can witness be party to the deed?<\/th>\n<\/tr>\n<\/thead>\n \n\t ACT<\/td> Yes but so long as it is expressed to be a deed\/sealed and is signed and witnessed properly, it is taken to be sealed (Civil Law (Property) Act 2006<\/a> (ACT) s 219(3))<\/td> Yes<\/td> Yes (s 219(1)(b))<\/td> No (s 219(1)(b))<\/td>\n<\/tr>\n \n\t NSW<\/td> Yes but so long as it is expressed to be a deed\/sealed and is signed and witnessed properly, it is taken to be sealed (Conveyancing Act 1919<\/a> (NSW) s 38(3))<\/td> Yes<\/td> Yes (s 38(1))<\/td> No (s 38(1))<\/td>\n<\/tr>\n \n\t NT<\/td> Yes but so long as it is expressed to be a deed\/sealed and is signed and witnessed properly, it is taken to be sealed (Law of Property Act 2000<\/a> (NT) s 47(2))<\/td> Yes<\/td> Unless literally sealing, yes (s 47(2))<\/td> Unless literally sealing, no (s 47(2))<\/td>\n<\/tr>\n \n\t Qld<\/td> Yes but so long as it is expressed to be a deed\/sealed and is signed and witnessed properly, it is taken to be sealed (Property Law Act 1974<\/a> (Qld) s 45(1))<\/td> Yes<\/td> Unless literally sealing, yes (s 45(1))<\/td> Unless literally sealing, no (s 45(1))<\/td>\n<\/tr>\n \n\t SA<\/td> Yes but so long as it is expressed to be a deed, it is a deed even if not literally sealed (Law of Property Act 1936<\/a> (SA) s 41(5))<\/td> No (s 41(3))<\/td> Yes (s 41(2))<\/td> No (s 41(2))<\/td>\n<\/tr>\n \n\t Tas<\/td> Yes but so long as it is expressed to be a deed\/sealed and is signed and witnessed properly, it is taken to be sealed (Conveyancing and Law of Property Act 1884<\/a> (Tas) s 63(5))<\/td> No (s 63(3))<\/td> Yes (s 63(2))<\/td> No (s 63(2))<\/td>\n<\/tr>\n \n\t WA<\/td> No (Property Law Act 1969<\/a> (WA) s 9(2))<\/td> No (s 9(3))<\/td> Yes (s 9(1)(b))<\/td> No (s 9(1)(b))<\/td>\n<\/tr>\n \n\t Vic<\/td> Yes but so long as it is expressed to sealed, it is taken to be sealed (Property Law Act 1958<\/a> (Vic) s 73A)<\/td> Yes<\/td> No<\/td> N\/A<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n
\nPh 03 9092 9400 Fax 03 9092 9440 dba@dbalawyers.com.au<\/a> www.dbalawyers.com.au<\/a><\/p>\n