Signing documents in a pandemic: what to do when signatories are isolated or scattered
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Covered in this webinar:
Legal requirements for signing documents remotely.
Part electronic mechanisms.
Practical tips for signing documents online.
Witnessing signatures remotely: law reform and latest updates.
This session was recorded on 19 March 2020.
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It's extremely welcome, particularly in relation to that old bugbear – deeds.
Queensland now the preferred governing law for deeds — deeds can be electronic
The Regulation makes sweeping reforms of the law relating to deeds, removing many of the difficulties, and it is drafted plainly and clearly.
While this is temporary, there is some hope that much of it may become permanent as a number of points reflect a report prepared by Queensland University of Technology on the Property Law Act (others reflect concerns that we have raised).
The clarity of the changes should remove any doubts about electronic deeds in Queensland. Those looking for reasons why deeds governed by Queensland law cannot be electronic should find the challenge insurmountable. This includes Queensland law deeds signed under section 127 of the Corporations Act 2001 (Cth).
Among other things the regulation expressly:
allows a deed to be made or signed electronically (and removes the requirements for a deed to be made on paper or parchment);
allows a deed to be signed without a witness;
removes the requirement for a deed to be sealed or deemed to be sealed; and
allows any corporation to sign deeds (without a seal) by two directors, a director and a secretary, or a sole director and secretary (this is consistent with s127 of the Corporations Act) and to sign deeds in any other manner allowed by law.
The above includes foreign corporations and statutory corporations incorporated anywhere in Australia.
In addition, it:
allows foreign corporations to sign according to the law of their place of incorporation and statutory corporations to sign according to their statute;
allows a deed to be signed by split execution and in counterparts; and
allows an agent to sign a deed even where the agent has not been appointed under seal.
It does require:
a deed to be in writing and contain a conspicuous statement indicating that it is executed as a deed;
a deed to be delivered as under existing law (note this can be done without physical delivery); and
electronic signatures to satisfy tests as to identity and reliability similar to the electronic transactions legislation and similar emergency legislation in other jurisdictions (but it does not require the other party's consent to electronic signature). These tests are generally easily satisfied.
It does not expressly deal with partnerships.
In general, this makes Queensland the most favourable governing law for deeds during the temporary regime, followed by Victoria, then New South Wales.
General powers of attorney
Similar changes are made for general powers of attorney.
The Regulation provide that certain mortgages of land can be created electronically and registered.
On electronic signing, the Regulation allows for electronic signing and remote witnessing by audiovisual means of affidavits, statutory declarations, enduring powers of attorney and wills.
There are procedural requirements for audiovisual witnessing, and only limited classes of people (such as lawyers etc) may act as a witness by audiovisual means.
The remote witnessing requirements are similar to those introduced in New South Wales but require qualified witnesses like legal practitioners. That is less of a concern, as under the Regulation witnessing is no longer a requirement for deeds and powers of attorney (and affidavits and statutory declarations already require qualified witnesses).
12/05/20 - Good news in Victoria on electronic deeds and remote witnessing
Under its COVID-19 emergency legislation, Victoria has introduced temporary regulations allowing for:
the electronic execution of deeds and mortgages;
the remote witnessing of documents effecting transactions; and
the electronic execution and remote witnessing of powers of attorney, wills and statutory declarations (but not affidavits, which are covered in the emergency legislation itself).
The provisions allowing electronic deeds (sections 5 and 6) operate by modifying the Electronic Transactions Act 2000 (Vic) but are clear — and should be sufficient to convince the most crusty die-hard. They apply whether the deed is signed by an individual or a corporation. This makes Victorian law a very attractive governing law for executing deeds. They don't need to be witnessed. They can now be electronic.
The provisions also apply to mortgages.
Electronic split execution OK, with procedural requirements
There is specific provision modifying the Electronic Transactions Act 2000 (Vic) to allow signatories required to sign the same document to sign different counterparts of the same document electronically (section 12). There is a procedural requirement that every signatory and every other party receives every electronically signed copy.
This provision may not have affected the issue whether section 127 of the Corporations Act 2001 can be satisfied by split execution, but the recent Determination by the Federal Treasurer (dealt with here) has solved that for now.
Counterparties might not be able to reject electronic signatures
The Regulations provide that the fact that a party proposes to sign electronically in a manner otherwise complying with the relevant requirements of the Victorian Electronic Transactions Act is not of itself sufficient reason for other parties to refuse the consent required under that Act to that electronic signature (section 11).
Signing documents (including deeds) electronically under power of attorney — a procedural trap for the unwary?
Perhaps unnecessarily, the Regulations say expressly that attorneys can sign documents electronically where the attorneys include a statement they are signing under the Regulations (section 35(2)). We were not aware of any doubt on that score.
What happens if an attorney now signs electronically without such a statement? Do we now need the statement? Is this a trap for young players (and old ones)?
In our reading, the Regulation should not limit the way documents can be signed — section 35(2) is inclusive, so generally documents should still be able to be executed electronically by an attorney without the statement where there is no other impediment. But where a document is executed during the currency of the Regulations by attorneys and Victorian law is relevant, for more abundant caution, it would be useful to include such a statement where feasible.
Audiovisual witnessing with few procedural requirements
The Act also provides for a mechanism for documents to be witnessed by audiovisual means.
In Victoria this does not apply generally to deeds, which do not need to be witnessed.
There are not as many requirements to be satisfied as there are in the New South Wales equivalent regulation, but the witness does need to state he or she is witnessing by audiovisual link in accordance with the Regulations.
6/5/20 - Treasurer modifies the Corporations Act to permit remote meetings and signing of documents
I am delighted to say that the Treasurer has introduced changes to the way companies can sign documents. The 'cautious optimism' I expressed in earlier emails after dealings with Treasury on the subject was not misplaced.
Using his power under emergency legislation, the Treasurer has issued a statutory instrument modifying the Corporations Act 2001 for a period of six months to provide for:
the electronic execution of documents by companies, and
general meetings and other meetings to be held remotely.
Signing documents in a pandemic
The instrument modifies sections 127(1) and 129(5) of the Act.
allows documents to be signed by companies under s127(1) electronically, so that two directors, a director and a secretary, or a sole director and secretary can sign in that way
provides for 'split execution' where the relevant officers of the company sign separate counterparts (physical or electronic), and
modifies the assumption in s129(5), so that parties dealing with companies may assume a document has been duly executed if it appears to have been executed under the modified s127(1).
This is a considerable advance. As we have previously noted, there has been widespread uncertainty as to whether this could be done. This has proved to be an enormous impediment during lockdown to the extent that, in some cases, parties have felt they need to get documents physically signed, despite the isolation.
As to what would constitute electronic signing, it tracks the language of the Electronic Transactions Act, including the tests as to identity and reliability. The language may look a little awkward in this context, but the tests in the ETA have been interpreted liberally by the courts (see my paper here). They should accommodate most common methods of electronic signing, generally without any other step. With 'pasting' of a copy of a signature into a document (not using an electronic signing platform or a stylus etc) in some circumstances it may be prudent to have evidence it was pasted by or with the authority of the signatory.
The modification does not expressly refer to s127(3) and deeds. In our view, it should allow electronic execution of deeds, but it remains to be seen whether others are convinced.
Corporate and creditors' meetings
The modification allows for all meetings provided for under the Act, the Regulations, the Insolvency Practice Rules and the Passport Rules to be held remotely by technologies that give all persons a reasonable opportunity to participate.
This will cover, for example, general meetings, scheme meetings and creditors' meetings. Notices of the meeting may be given electronically, proxies may be given electronically and votes may be taken using various technologies.
A copy of the official document from Treasurer, Josh Frydenberg, can be found here.
30/4/20 - Progress in Victoria on enabling electronic execution, and on remote witnessing of affidavits
The Victorian Parliament has passed its emergency legislation, the COVID 19 Omnibus (Emergency Measures) Act 2020. It is the latest legislature to give the executive broad powers to amend legislation temporarily (the others being the Federal Government, Queensland and New South Wales).
Section 4 allows the Victorian Government by regulation to modify or disapply any legislation administered by the Attorney General in relation to a wide range of issues. These include: the witnessing, execution or signing of legal documents such as affidavits, statutory declarations, deeds, powers of attorney, contracts or agreements, undertakings and wills; and also the process by which a document is given or issued.
That provision gives broad power to deal with the issues that have been concerning us, in particular, the creation of electronic deeds.
In addition, the Act provides for the remote witnessing of affidavits by audiovisual link, and the electronic execution and attestation of affidavits.
Green shoots on legislation or regulation in various states
Various states have circulated for comment, or are considering, their own proposals for emergency enabling legislation or for regulations concerning remote witnessing and/or electronic signature. We have made suggestions.
Electronic land dealings accepted in New South Wales
From 27 April, the NSW Conveyancing Rules, the Conveyancing Rules - (COVID-19 Pandemic) Amendment, have been temporarily amended to allow for land dealings to be signed electronically and for copies of the electronically signed dealings to be registered.
This follows the issue of the Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020, which provides for witnessing via audiovisual link during the pandemic (see below). Both amendments will cease to apply on 23 October 2020 (subject to earlier repeal by Parliament).
The amendment to the Conveyancing Rules allows parties and witnesses to electronically sign land dealings, certain certificates and instruments lodged with deposited plans.
Anyone who signs electronically must confirm their identity and their intention to sign electronically by either:
including a statement near or above their electronic signature, or
using a digital signing platform that indicates on the instrument that an electronic signature was applied, and the date and time that this occurred.
The Office of the Registrar General has advised that these temporary changes do not alter any existing requirements for execution and certification, verification of identity or establishing the right to deal. It has published a Guidance Note on executing NSW paper land dealings during COVID-19 restrictions, providing further information as to how these steps can be completed for paper dealings during the pandemic.
Where electronic signing is chosen, the guidance says electronic signatures must comply with the requirements of Division 2 of Part 2 of the Electronic Transactions Act 2000 (NSW).
Still waiting for Commonwealth modifications of the signing provisions of the Corporations Act
We were cautiously optimistic after earlier discussions, but there has as yet been no apparent movement. The responsible minister is the Treasurer, who has an extraordinary amount on his plate.
That said, the Treasurer is placing pressure on the banks to accelerate loan transactions. But among the difficulties they face in doing so are the barriers and uncertainties relating to electronic execution of loan and security documents by companies — barriers and uncertainties he could remove quite simply, using powers granted under the emergency legislation.
In the absence of the Federal Government dealing with those issues, there are some steps the states can take to assist. The states in their regulations could expressly allow for electronic deeds, and for deeds to be signed without a seal by two directors or a director and a secretary. That would be of considerable assistance, though without all the advantages of a solution by the Federal Government. We are suggesting that be done.
23/4/20 - Progress in New South Wales on remote witnessing, but 'wait and see' on electronic deeds and electronic attestation
It follows the consultation draft referred to in our earlier email, but only in part.
In broad terms, the Regulation allows for the remote witnessing of documents, which is a big step forward. It will be welcome in a wide range of fields, including litigation.
However, the consultation draft of the Regulation had also dealt with the electronic execution of deeds, and electronic attestation of electronic documents. These were not included in the final version. The Government said: 'We are continuing to consider reform options for electronic signature and execution of documents that are currently required to be prepared in hard copy'.
The Government is conducting a new round of consultation and consideration on those topics and has already kicked it off in an email to stakeholders. The intention is to complete it quickly.
The Regulation provides that:
documents that require a witness may be witnessed by audio visual link but there are a few requirements as to how this may be done that need to be fulfilled;
tasks in relation to witnessing a document may be performed by audio visual link;
written oaths, declarations or affidavits required for a purpose specified in section 26 of the Oaths Act 1900 may be taken or made before an Australian legal practitioner; and
a statutory declaration may be made before a person before whom a statutory declaration under the Statutory Declarations Act 1959 of the Commonwealth may be made.
The Regulation will expire on 26 September 2020, unless this date is changed by further regulation or a resolution of Parliament.
The Regulation did not remove the exclusion of witnessing from the operation of certain provisions of the Electronic Transactions Act 2000 (NSW). Our view is that, despite this, documents signed electronically can be witnessed and witnesses can sign electronically, but it remains to be seen how many hold that view. Legislative certainty is likely to be necessary.
As mentioned above, in terms of reform this is not the end of the line. We understand that the difficulty with extending electronic execution was that there may be some who are concerned about risks, and so the Government has decided to have a deeper look.
Understandably, there may be some resistance among certain stakeholders to electronic documents. There needs to be continued impetus to achieve the necessary changes so there is certainty in the market that corporations can create electronic deeds and that witnesses etc can sign electronically, and electronic signatures can be witnessed.
New Queensland emergency legislation gives sweeping power to amend the law relating to documents
The Queensland Parliament has passed new legislation: the COVID-19 Emergency Response Act 2020. Section 9 gives the Government the power by regulation to change statutes or common law relating to documents, including their preparation, signing, witnessing, registration and verification of identity. It is the most sweeping power of the various jurisdictions. Watch this space.
For the more information on some of the questions you may have in regards to signing documents in a pandemic please click here.