Insights

COVID-19 and the move to e-signing

Real Estate & Projects

One of few upshots from the COVID-19 pandemic is that, with a large part of the country being required to work from home, governments were forced to respond to concern about e-signatures.

Earlier this year I wrote that e-signatures are treated no differently from any other form of signature at common law. Provided signatories have the requisite intent, directors and secretaries could electronically sign documents, including deeds, under s127(1) of the Corporations Act 2001 (Cth), and provided that appropriate precautions were observed and the common law formalities were understood, individuals could electronically sign deeds under the relevant state-based legislation.

A lot has changed since then. In April, Australia’s response to the COVID-19 pandemic was reaching fever pitch. Victoria’s stay at home directions had just come into effect and most law firms in Melbourne had begun working from home. Australia Post’s delivery times were starting to blow out and clients were increasingly asking their lawyers how they could keep their business running, and sign day-to-day documents securely, while working remotely.

With a new way of working and demand for certainty regarding the use of e-signatures, legislatures were quick to respond with reforms that were long overdue but that until then, had lacked sufficient impetus.

NSW was already an e-signature friendly jurisdiction with express provision for deeds to be created in electronic form and electronically signed and witnessed.1 Impliedly, however, a witness needed to be physically present to watch a signatory e-sign a deed. On 22 April 2020, NSW became the first jurisdiction to remove the logistical impediment for in-person witnessing and to allow for a witness to watch a signatory sign a document using an audio-visual link (remote witnessing).

On 5 May the Federal Government enacted the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020. The Determination modified s127(1) of the Corporations Act to clarify that:

  • split execution is permitted (ie, so that two officeholders of one company can each sign a different counterpart, resolving the dispute arising from Pickard)2
  • a company could also execute a document under s127 using electronic signatures.

To obtain the benefit of s127, the method of electronic execution needs to identify the signatory and indicate the signatory’s intention in respect of the document. A digital signing platform can meet this standard.

The determination has been extended to expire on 22 March 2021.

On 12 May, Victoria followed suit but took a different tack to NSW. Victoria’s regulations expressly permit the e-signing and remote witnessing of deeds and mortgages, statutory declarations, powers of attorney (POAs) and wills. For each class of document, relatively prescriptive criteria need to be followed to obtain the benefit (and safety net) of the regulations.3

The ACT also enacted legislation to allow remote witnessing on 14 May.

As at 15 May Queensland’s regulations initially related to wills and POAs, but on 22 May they were extended to apply to deeds, statutory declarations and affidavits. Queensland’s regulations are the most progressive, and helpfully, clarify that deeds do not need to be witnessed, made on paper or parchment, or expressed to be sealed.4

The legislation is only temporary?

Given the urgency required to enact the emergency legislation, the opportunity for input from the legal community was minimal, and while each jurisdictions’ regulations address similar matters, they are significantly different in their operation and application. The need for harmonisation is obvious.

Despite the differing approach between jurisdictions, anecdotally the changes have been welcomed by clients and positively received by those in the profession who, before COVID-19, had viewed e-signatures as inherently riskier and therefore inferior to wet-ink signing.

The need to rapidly adapt to remote working, combined with the comfort of state and federal emergency reforms, has led to growing confidence within the profession regarding the use of e-signatures.

This momentum must be maintained. Since the emergency legislation was implemented, stakeholders, including the Law Institute Victoria (LIV), continue to work with government departments to make the changes permanent, encourage consistency across jurisdictions and broaden their scope.

The lessons and experiences of this year must be built on to ensure lasting reforms strike the right balance between pragmatism and risk management and keep up with the demands of modern commerce.

This article was first published in the December 2020 edition of the Law Institute Journal.

Our team is actively monitoring and considering the implications of legal and regulatory developments in response to the COVID-19 pandemic. You can find our COVID-19 collection here.


[1] Conveyancing Act 1919 (NSW), s38A. [2] Note 1 above - "a single, static document" and explanatory statement. [3] See for example reg 9(4) in relation to the remote witnessing of deeds and mortgages. [4] See regs 12N(2), 12O and 12S.

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

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Mark Burrows

Mark Burrows

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