Legal Tip 222: Electronic Signing of Deeds – Don’t!

Discussion in 'Legal Issues' started by Terry_w, 23rd Jul, 2019.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    I have recently come across a client who had their trust deed signed by the settlor, electronically. The settlor had inserted a jpeg of her signature in the deed and emailed it to the client for signing. There was no original copy. It was also electronically signed by the witness of the settlor. It is not known if the witness was present with the settlor when it was signed, or if they signed the same document.

    This deed would fail. It is not executed.


    Another client had their deed signed by the accountant who set the trust up, but it was also witnessed electronically – one of the accountant’s witnessed the client’s signature. Interestingly signatures were 'witnessed' from afar!

    This deed also fails.


    Deeds cannot be signed electronically in any state of Australia. There is one exception now due to recent amendments to the Conveyancing Act, s 38A, in NSW. This new legislation does allow for deeds to be signed electronically, from 2019, but the legislation does not cover side issues such as how can an electronically signed deed be witnessed? When 2 people sign a document on different computers they are not signing the same document so will this be valid?

    Can companies sign electronically?

    What happens when someone dealing with the trustee wants to see the original deed? If you were to print it out would it be original? How could a certified copy of the deed be made?


    My tip: Do not sign any deed electronically, even if you are an individual based in NSW. Print out the deeds and sign with a pen.


    If you have signed a deed electronically seek legal advice on how to rectify this problem, even if located in NSW. And don’t go back to the same firm that caused the problem in the first place as they are likely to not know about the issue or how to fix it.
     
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  2. Simon Hampel

    Simon Hampel Founder Staff Member

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    I was just thinking about this the other day.

    We're setting up a new share trading account for our family trust - they asked to see a certified copy of our trust deed. I had to locate our original copy from the filing cabinet and print off the PDF copy we had so I can take them both to a JP for certification.

    When you start doing this stuff electronically, it all starts to become meaningless - how can you verify the authenticity of this stuff?

    Until we get a proper universal document signing mechanism (by which I mean actual cryptographic digital signing - not pasting a JPG image!), then I fear the opportunities for fraud are going to increase significantly if we continue down this path.

    The problem with cryptographic signing of documents is that it adds a huge amount of complexity (and therefore cost) to a process - especially for non-technical people - thus potentially defeating the purpose of aiming for digital document handling in the first place.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Yep, someone wanted me to certify an email copy of their immigration visa the other day as it was required for something else. How do you do that! I just wrote an explanation that the original exists in electronic format and I had not sighted the original.
     
  4. SatayKing

    SatayKing Well-Known Member

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    Although it is a side issue to the matter of signing Trust Deeds, I have noticed the tendency for some firms to request electronic signatures for the annual statements for ASIC.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    That should be fine.
     
  6. Simon Hampel

    Simon Hampel Founder Staff Member

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    Interestingly, my accountant has started using one of those online document signing applications to share documents with clients.

    Because I'm the contact for all our entities and such, I received the requests to electronically sign all the documents - including my wife's tax return.

    When I pointed out that I was not able to sign my wife's tax return - they replied saying that it is the IP address that is recorded and so given that my wife would have recorded the same IP address as me, it wouldn't matter.

    I haven't checked the veracity of this and wasn't entirely comfortable, so I went old school, printed the return and asked my wife to sign it before scanning and uploading it back to the portal.

    I might have to ask that future correspondence about my wife's tax returns gets sent to my wife so that she can sign things herself.
     
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  7. JDM

    JDM Well-Known Member

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    Same issue applies to signing documents under a power of attorney in Queensland. I'm not sure about other States. Generally agreements are fine to sign electronically and deeds are not.

    We recommend something like DocuSign that has an audit trail to assist if there are allegations of fraud.
     
  8. Islay

    Islay Well-Known Member

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    Same issue last year. Also 3 adult children. For historical and geographical reasons things were still going through my email. I don't want to know anything! I used to just forward to which ever person should have received the email in the first place. Sent the accountant all their email address's and told them to deal with the directly.
     
  9. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Commonwealth (and state) laws that permit digital signing exist and contain details of what CANNOT be signed most commonly through complex understanding of what the law does not prescribe to be included. eg does another law require witnessing or presence and was this complied with ?

    ELECTRONIC TRANSACTIONS ACT 2000 eg NSW
    Electronic Transactions Act 1999 eg Commonwealth

    Things that can be signed digitally include forms, declarations etc. Deeds etc can be problematic especially where witnessing, presence and other legal concepts may affect the making of the deed, contract or document. A will could also be problematic BUT recent cases have accepted that wills can be made in ways not contemplated even a few years ago. eg by iphone !! However while the Quinn case (QLD) allowed such a recording the extreme issues encountered expose some concern that the principle is not automatic and to be relied upon. The same concerns could be held for some electronic transactions and faith and reliance on a electronic signature etc may only be tested many years later at extreme cost in a court.
     
    Last edited: 23rd Jul, 2019
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    There are a long history of cases on wills not being signed or witnessed or in the wrong form etc. There was one case of a will being witnessed but not signed!

    What is new is the electronic side of things. Though a will that is not in proper form will need to be approved by the Supreme Court which will be many times the cost of doing a will properly in the first instance.
     
  11. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Yes. Wills, Binding Nominations, nominations to super trustees and a range of matters especially estate planning seem to only ever be tested well after the event. The true value of these documents is only discovered at death. The errors made suddenly become a problem.

    I encountered a strange one. A UK share form. Black and white A4 paper. Client scanned it. Then reprinted it after some time and sent it with the transfer request. Rejected. Only the original could be accepted. It had been lost. Title insurance was required. $24,000 !!!
     
  12. money

    money Well-Known Member

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    That's a pretty stupid way for the electronic signing company to use. IP addresses mean nothing, lots of people use VPNs and can have their IP address appear from anywhere in the world they want. What electronic document signing company was that? Is it DocuSign by any chance?
     
  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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