Insights

Electronic signatures during a pandemic

Real Estate & Projects

One of the few upshots from the COVID-19 pandemic is that, with a large part of the country required to work from home, governments were forced to respond to concerns about e-signatures. The Commonwealth and several states passed temporary legislation to facilitate the use of e-signatures and to permit remote witnessing.

In a previous edition of Connected, I wrote that e-signatures are treated no differently to any other form of signature at common law. Provided signatories had the requisite intent, directors and secretaries could electronically sign documents, including deeds, under section 127(1) of the Corporations Act 2001 (Cth) (Corporations Act), and provided that appropriate precautions were observed, individuals could electronically sign deeds under the relevant state-based legislation.

A lot has changed since then.

In April 2020, 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 us how they could keep their business running, and sign day-to-day documents securely, whilst 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, until then, had lacked sufficient impetus.

Emergency legislation

New South Wales

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 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).

Commonwealth

On 5 May 2020 the Federal Government enacted legislation which modified s127(1) of the Corporations Act to clarify that:

  • "split execution" is permitted (i.e. two officeholders of one company can each sign a different counterpart of the same document); and
  • a company can 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 such as DocuSign can meet this standard.

Whilst the temporary legislation has been extended to expire on 22 March 2021, a public consultation has been conducted on draft legislation which would amend the Corporations Act to effectively make these changes permanent.

Victoria

On 12 May 2020 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.2

The Victorian Government is currently drafting legislation which is likely to, amongst other things, make these changes permanent.

Queensland

As at 15 May 2020 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.3

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 whilst each jurisdiction's 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, the changes have been welcomed by our 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 Commonwealth emergency reforms, has led to growing confidence amongst our clients and within the profession regarding the use of e-signatures. From what we can tell at this stage, this momentum is likely to continue.

This article was adapted from a piece published in the December edition of the 2020 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), s 38A [2] See for example regulation 9(4) in relation to the remote witnessing of deeds and mortgages [3] See regulation 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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