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Electronic Signing in Australia – Where is it up to?

Electronic Signing in Australia – Where is it up to?

Jul 13, 2023 | Construction, Hotels, News, Real Estate, Uncategorized

A legislative comparison of electronic signing regimes in Australia

Background 

In 2020, temporary changes to the Corporations Act 2001 (Cth) (the Act) were made as a COVID safety measure, which allowed for the electronic execution of documents. This article provides insights on how the changes have now been made permanent in the respective State and Territories.  

Following on from the Corporations Amendment (Meetings and Documents) Act 2022 (Cth), companies are now able to execute contracts, deeds, and other documents electronically. This has prompted the States and Territories to follow suit, by amending State and Territory legislation to enact similar provisions that replicate the amendments made to the Corporations Act 2001 (Cth).  

The amendments to both Commonwealth and State laws have sought to strike a balance between providing sufficient security in the identification of signatories as well as affirming the intention to create legal relations and facilitating more efficient and cost-effective practices of conducting business through broadening the means of executing documents in a post-pandemic era. One of the main benefits of electronic conveyancing is the speed and convenience it offers, allowing transactions to be completed without the need of paper-based documents reducing the risk of error and delays, and saving resources for all parties involved.  

Commonwealth Legislation  

The Corporations (Coronavirus Economic Response Determination (No. 1) 2020 was the Commonwealth’s first amendment to electronic execution law. This modified the operation of provisions of the Corporations Act 2001 (Cth) and the Corporations Regulations 2001 (Cth), to allow for meetings to be held online, and documents to be executed electronically. 

To solidify the permanency of these laws, the Corporations Amendment (Meetings and Documents) Act 2022 (Cth)was introduced, not only affirming the electronic execution of documents, but more specifically establishing that: 

  • documents (including deeds) may be signed electronically by any method that identifies both the identity and intentions of the party, in accordance with sections 110A(2) and 110A(3) of the Act; 
  • an agent can execute a document (including a deed) on behalf of a company electronically, in accordance with section 126; 
  • a sole director proprietary company that does not have a company secretary can now also execute a document (including a deed) in accordance with section 127(1) or section 127(2); 
  • for a company executing a document under seal under section 127(2) of the Act, the witness can observe the witnessing of the seal by electronic means; and 
  • for the execution of a deed, delivery is not necessary if a company executes a deed in accordance with section 127(1) or section 127(2). 

New South Wales  

New South Wales was one of the first of the States to implement provisions for electronic execution in April 2020. Throughout 2020 and 2021, New South Wales made numerous changes, and introduced new laws expanding the types of documents that can be executed electronically. 

 These changes namely allowed for:  

  • the remote witnessing of signatures through an audio-visual link;  
  • the electronic signature of a client authorisation; 
  • paper land dealings to be signed and witnessed electronically; and 
  • owners’ corporations and community associations to vote and execute documents electronically, without having an affixed seal.  

While most of these amendments did not have an expiration date, all have since become permanent. The Electronic Transactions Act 2000 (NSW) was amended through the Electronic Transactions Amendment (Remote Witnessing) Act 2021 (NSW) establishing permanency for the electronic execution, remote witnessing, and attestation of documents. These amendments further allowed for a signatory or a witness of a signatory to be located outside of the jurisdiction for any document being executed in accordance with the of Laws of New South Wales.   

Victoria  

Alongside New South Wales, Victoria implemented provisions for electronic execution in April 2020. The COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020 (Vic) allowed for deeds to be electronically executed and permitted the remote witnessing of transactions and other documents that had previously required in-person witnessing under Victorian law. This was repealed and replaced with the Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 (Vic) which amended the Electronic Transactions Act 2000 (Vic), providing that: 

  • electronic signatures are sufficient and may be witnessed through an audio-visual link; 
  • a deed may be created in electronic form and may be signed, sealed, and delivered by electronic communication; and 
  • a mortgage may be in electronic form. 

The Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 (Vic) further amended the execution and witnessing requirements under the Powers of Attorney Act 2014 (Vic). However, electronic execution must adhere to ‘remote execution procedure’ as set out in sections 5A to 5D.  

Queensland  

Following New South Wales and Victoria, Queensland made amendments to various legislation including the Property Law Act 1974 (Qld), Oaths Act 1867 (Qld) and the Power of Attorney Act 1998 (Qld) now allow individuals to sign documents electronically including deeds, oaths, affidavits, general powers of attorneys and declarations.  

At the end of 2021, the Justice and Other Legislation Amendment Act 2021 (Qld) was introduced, in an attempt to make some of these temporary measures permanent. However, while the Act was assented to on 24 November 2021, the relevant provisions in the Act were only to take effect on a day to be fixed by proclamation. 

Now, pursuant to Proclamation No 2 of the Justice and Other Legislation Amendment Act 2021 which was signed on 17 March 2022, the relevant provisions (commenced on 30 April 2022), which permit: 

  • affidavits and statutory declarations being in electronic form, electronically signed and witnessed through an audio-visual link; 
  • general powers of attorney (POA) for businesses being in electronic form, signed electronically without a witness and made in counterparts/by split execution; 
  • corporations executing a POA without using a common seal; 
  • deeds being made or signed electronically, without a witness and without needing to be sealed; and  
  • mortgages being in electronic form and signed electronically by the mortgagor or the mortgagee, without the need for any witnesses. 

Australian Capital Territory (ACT) 

As amended in 2012 by the Electronic Transactions Amendment Act 2012 (ACT), the Electronic Transactions Act 2001 (ACT) had already facilitated the electronic execution for certain documents (provided that execution is conducted in accordance with section 9).  

In 2020, the ACT introduced the COVID-19 Emergency Response Act 2020 (ACT), as a temporary measure, permitting for certain documents to be witnessed by an audio-visual link. The documents that are generally included under section 4 of COVID-19 Emergency Response Act 2020 (ACT) are POAs and enduring Powers of Attorney, health directions, wills, and affidavits.   

For remote witnessing to be considered valid in the ACT, the legislative amendments required the witness to: 

  • observe the signatory sign the document in ‘real time’; 
  • provide confirmation through signing the document or a copy of the document;  
  • be reasonably satisfied that the document signed by the signatory is the same document (or a copy of the same document) as signed by the witness in confirmation; and 
  • endorse the document by providing a statement that specifies the method used to witness the document, and that the signature was witnessed in accordance with section 4 of the COVID-19 Emergency Response Act 2020 (ACT). 

However, this legislation expired on 31 December 2022, following the end of the penultimate COVID-19 emergency period, and the ACT is still yet to legislate any provisions for remote witnessing post-COVID.  

Western Australia 

Western Australia introduced the COVID-19 Response and Economic Recovery Omnibus Act 2020 (WA) in its response to the COVID-19 pandemic. Under this act, witnesses can witness signatories signing certain documents, such as affidavits and statutory declarations (under the Oaths, Affidavits and Statutory Declarations Act 2005 (WA)), remotely through an audio-visual link, using technology that facilitates continuous and simultaneous audio and visual communication (e.g., FaceTime, Zoom or Microsoft Teams). 

Division 4 of Part 2 of the Act was extended until 31 December 2022, pursuant to the COVID-19 Response and Economic Recovery Omnibus Act 2020 Postponement Proclamation 2021 (WA). However, in 2023, Western Australia has made no advancements towards instituting legislation to provide avenues for permanent electronic witnessing. 

South Australia  

In 2020, South Australia introduced temporary measures, extending the list of persons who could witness statutory declarations, as well as suspending the requirement for land registry instruments to be witnessed.  

From 20 April 2020, pursuant to the COVID-19 Emergency Response (Section 16) Regulations 2020 (SA)(Regulations), the list of persons who could witness statutory declarations in South Australia under the Oaths Act 1936 (SA) was extended to include all the persons listed in Schedule 1 of the Regulations.  

The South Australian Government has made regulations under the Oaths Act 1936 (SA) as amended by the Oaths (Miscellaneous) Amendment Act 2021, to allow, from 14 October 2021, affidavits to be witnessed remotely over audio-visual link. Also commencing on 20 April 2020, the COVID-19 Emergency Response (Section 17) Regulations 2020 (SA) provided that section 17 of the COVID-19 Emergency Response Act 2020 does not apply when a person is required to be physically present to witness the signing, execution, certification or stamping of a document or to take any oath, affirmation or declaration in relation to a document.  

Northern Territory 

The Northern Territory introduced the Land Legislation Amendment Bill 2022 in November 2022, and it was successfully passed by the Northern Territory Government in February of 2023. The Land Legislation Amendment Bill 2023 purpose was to has amended the Electronic Conveyancing Act 2013. The key provisions to provide that documents may take the form of electronic conveyancing documents, references to signing or executing of documents are references to documents that are electronically signed, requirements for clients authorisations for electronic conveyancing and requirements for verification of identity. 

Tasmania  

The Tasmanian government enacted the COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020 (Tas) as its response to COVID-19. The Act was assented to on 27 March 2020 and consolidated on 3 September 2022. The COVID-19 Disease Emergency Notice 18/2020, made under section 17 of the COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020 further allowed for the remote witnessing of certain types of documents, provided that: 

  • the intended recipient of the document must agree to the method of signature, by way of supplying the producer of the document with their email address or telephone number for the purpose of receiving the document as being sent through email or facsimile; 
  • the witness must observe the signatory sign the document through an audio-visual link in ‘real time’; and  
  • the witness must be satisfied the document being signed by the signatory is the same document, as the document the witness is attesting to observing the signatory sign.  

Subsequently, Disease Emergency Notice 2/2021 and Notice 12/2021 have been made to further allow for documents to be served, signed and witnessed through electronic means as authorised under section 17 of COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020 (Tas), provided they are signed in accordance with section 7 of the Electronic Transactions Act 2000 (Tas). Nevertheless, wet-signatures and in person witnessing are still required for certain categories of documents, including the valid execution of deeds.   

Final Thoughts 

The amendments made to the Commonwealth law, as well as the amendments that many of the States and Territories have made to their own legislation has actively assisted in enhancing the practical aspects of executing documents in Australia.  These laws improve both the cost and time efficiency of signing and witnessing documents, by incorporating the technology that has been both developed and relied upon during the COVID-19 pandemic. This has led to efficiencies in practice in completing transactions, which has had positive impacts in the time it now takes and the cost of completing transactions.  

An obligation to “carry on the business” – High Court defines the principles in Laundy’s Case

An obligation to “carry on the business” – High Court defines the principles in Laundy’s Case

Apr 19, 2023 | Construction, Hotels, News, Real Estate, Uncategorized

An obligation to “carry on the business” – High Court defines the principles in Laundy’s Case

A decision regarding the sale and purchase of a hotel in Pyrmont that has impacts on many current transactions has recently been handed down from the High Court of Australia. The primary question in the case revolved around “carrying on” provisions, a standard contract provision included in almost all Hotel (and sale of business) transactions. The interpretative scope of what that phrase actually means has now been determined.

 

The Facts

 

In January 2020, Laundy Hotels (Quarry) Pty Ltd (the vendor) and Dyco Hotels Pty Ltd (the purchaser) entered into an agreement to purchase the Quarryman’s Hotel and associated business (the Hotel) in Pyrmont for $11.25 million. Completion of the land and business contracts were initially contracted to occur on the 30th and 31st of March 2020 respectively.

During the period post-exchange and pre-completion the COVID-19 pandemic occurred – bringing with it, mandatory public health orders. During that time, the Hotel was not providing dine in services and was instead operating as a takeaway food and beverage business. On 25 March 2020, the purchaser informed the vendor that it would not complete the contract because the vendor was not ready, willing and able to complete due to its breach of clause 50.1 which required the vendor to “carry on the Business in the usual and ordinary course as regards its nature, scope and manner …”. The vendor disagreed, subsequently served a notice to complete, and terminated the contract once completion did not occur at the expiry of the notice to complete.

 

“Usual and ordinary course…”

Clause 50.1 of the contract provided that “from the date of the contract up until Completion, the vendor must carry on the Business in the usual and ordinary course as regards its nature, scope and manner.” This type of clause is generally accepted and included in contracts involving the simultaneous sale of land and its associated business, as is usual in hotel transactions. The key question was whether the vendor’s operation of the Hotel which was limited by public health orders, and not operating with the full scope at the time the contract had been entered into constituted a breach of clause 50.1.

 

The Findings

The High Court found that the vendor did comply with the obligation as the proper construction of the clause implied that “the vendor’s obligation…. is moulded by, and subject to, the law as in force from time to time”. It was also further reasoned that because the Hotel operates pursuant to its liquor and gaming licence, contravention of public health orders could place that licence at risk and thus actually cause a breach of the clause.

The High Court also investigated several other provisions in the contract including the vendor’s warranties and excluded warranties and found that the requirement for the carrying on of the Hotel to be lawful was not required to be stated in the contract, as the nature of the Hotel required specific legal authority to continue to operate.

 

What does this case mean for hotel transactions?

The case puts beyond doubt that the a vendor’s ability to continue to operate the business in the “usual and ordinary course” is subject to what is actually permissible at law, which may change from exchange to completion. A vendor cannot be compelled to continue to operate a business contrary to law or regulations to fulfil a contractual promise to a purchaser.

For vendors, it is important to ensure that your warranties, excluded warranties and “carrying on” provisions are flexible enough such that sudden changes in the broader regulatory landscape can be accommodated for, and amendments are made to sale and purchase agreements to follow this decision to put purchasers on notice of what may be deemed to be a somewhat obvious interpretation. Purchasers will need to understand that “carrying on” and other similar clauses do not mean that on completion a purchaser will receive the identical business that has initially been contracted for, as the business may be subject to change depending on unforeseen legal and regulatory impositions.

However, should the legal and regulatory framework remain constant, “carrying on” provisions will continue to provide the requisite protection for purchasers as vendors will be obligated to adhere to these contractual provisions.

 

Other Articles of Interest

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Legislative Wrap-Up 2022: Grant of option now dutiable

Legislative Wrap-Up 2022: Grant of option now dutiable

Mar 13, 2023 | Construction, Hotels, News, Real Estate, Uncategorized

Legislative Wrap-Up 2022: Grant of option now dutiable

On 19 May 2022, the Duties Act 1997 (NSW) was amended by the State Revenue and Fines Legislation Amendments (Miscellaneous) Act 2022 (NSW) (the Act). Upon its royal assent, a new head of duty and substantial amendments to the current Act were made and imposed on transactions which result in a “change of beneficial ownership”.

Pursuant to s 8(1)(b)(ix) of the Act, the term “change in beneficial ownership” includes:

    • the creation of dutiable property;
    • the extinguishment of dutiable property;
    • a change in equitable interests in dutiable property;
    • dutiable property becoming the subject of a trust; and
    • dutiable property ceasing to be the subject of a trust.

The above is designed to broaden the scope of transactions which are now considered dutiable under this Act.

 

How does this affect you?

    One of the most important outcomes from the introduction of this legislation is that duty is now payable on the grant of an option.

    Under ss 11(1)(K) of the Act, an option to purchase land in NSW is a creation of dutiable property. Pursuant to s 8(3) of the Act, the creation of dutiable property constitutes a change of beneficial ownership. Therefore, duty is now payable on a grant of an option to purchase land in NSW.

    At the time the Act came into effect, there was much ambiguity on whether the above assessment was in fact correct. However, Revenue NSW have been quick to suppress any uncertainty, noting the following in their published guidance notes:

    “A put option and/or call option granted over dutiable property in NSW (such as over land or an interest in land) is a ‘change in beneficial ownership’.  This means that duty is payable on any grant fee paid for a put and/or call option entered into from this date”.

    “Section 8(1)(b)(ix) of the Duties Act 1997 introduces duty on certain transactions that results in a change of beneficial ownership of dutiable property. This includes the creation of dutiable property. This means that duty will be payable on the grant of a put and/or call option.”

    The Act also made the following amendments which must be noted:

     

      • duty on acknowledgement of trust;
      • providing for a refund of foreign purchaser surcharge duty/ surcharge land tax in relation to a transfer of land, after the transfer, the land is used by the transferee whole or predominantly for commercial and industrial purposes; and
      • the introduction of a new anti-avoidance regime into the Taxation Administration Act, which replace anti-avoidance provisions in Part 11A of the Duties Act.

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    Legislative Wrap-Up 2022: Corporations Act gets a new virtual look

    Legislative Wrap-Up 2022: Corporations Act gets a new virtual look

    Mar 13, 2023 | Construction, Hotels, News, Real Estate, Uncategorized

    Legislative Wrap-Up 2022: Corporations Act gets a new virtual look

    In late February, the Corporations Amendment (Meetings and Documents) Act 2022 (Cth) (Meetings and Documents Act) came into effect, amending the Corporations Act 2001 (Cth) (Corporations Act). Shaped by the evolving role technology plays in a post-COVID world, the Meetings and Documents Act came with a raft of changes.

    What has changed?

    The Meetings and Documents Act accommodates for the increasingly virtual nature of business by amending sections 249R and 252P of the Corporations Act to allow a meeting of members to be held online. In addition to being held physically, meetings can now be held at both physical venues and virtually (a hybrid meeting), or entirely virtually, if the technology has been consented to by all directors.

    As well as this, the Meetings and Documents Act also allows for technology-neutral signing of documents, so long as the method of signing properly identifies the person and indicates their intention and is as reliable as would be appropriate.

    Sole director signing now easier

    The Meetings and Documents Act also amended the Corporations Act to permit a sole director of a company that has no company secretary to sign under s 127(1) of the Corporations Act. Previously, a sole director could only sign under s 127(1) if they were also the company secretary. Importantly, this change means the assumptions made under s 129(5) as to the due execution of company documents applies and extends to documents which are signed by a sole director only, without the signature of a company secretary.

    Other Articles of Interest

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    Hotel Investment and Development State of Play Survey Australia 2022

    Hotel Investment and Development State of Play Survey Australia 2022

    Dec 1, 2022 | Hotels, News, Shared, Uncategorized

    Hotel Investment and Development State of Play Survey Australia 2022

    Hospitality advisory group Minett Prime Square and law firm Keighran Legal + Advisory have partnered to benchmark the state of play within the hotel investment and development industry.

    We are inviting industry to participate in a survey. Anonymised, aggregated results and key insights will be shared with the industry. The survey will help you:

    • Discover the short to medium term market sentiment in the hotel development and investment space in Australia; and
    • Gain an overview of the perceived economic and social indicators which will influence how the market performs.

    Property developers, institutional investors, hotel operators and real estate private equity groups are in an ideal position to provide an insight to help shape the industry’s understanding as the market evolves further. Your participation will support the development of valuable industry knowledge.

    To participate in the survey, please follow the link below. Survey closes Wednesday 1st June.

    We look forward to reviewing the results and sharing them with you.

    Take survey here:

    https://bit.ly/mpshotelsurvey

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    Landlords and Tenants: At what stage do lease documents become binding?

    Landlords and Tenants: At what stage do lease documents become binding?

    Nov 1, 2022 | Construction, Hotels, News, Real Estate, Shared, Team, Uncategorized

    Landlords and Tenants: At what stage do lease documents become binding?

    Published: 29 November 2021

    Written by: Duane Keighran and Sara Ibrahim

    The case of Thorn Australia Pty Ltd v Centuria Property Funds Ltd [2021] NSWSC 1217 considers whether provisions of a signed lease and incentive deed which were signed by the tenant and delivered to the landlord could amount to the tenant (Thorn) being immediately bound by the deeds. Due to Covid-19 lockdown restrictions, the landlord (Centuria) was unable to complete execution of the documents in a timely manner after the tenant had delivered its signed copies. It was during this period of inaction by the landlord that Thorn withdrew from the transaction. Thorn contended that it did not intend to be immediately bound on delivery of the signed deeds.

     

    How did this issue arise?

    In April 2021, both parties had entered into a heads of agreement which was prepared by Centuria (as landlord). Within the heads of the agreement, the following relevant provisions were set out:

    “The information contained in this proposal is not a binding lease between the prospective Lessee and the Lessor and is subject to final Lessor and Lessee board approval.
    The Lessee and the Lessor reserve the right to withdraw from and terminate negotiations at any time prior to execution of formal Lease documents by both the Lessee and the Lessor. The Lessor’s rights in respect of the deposit and legal costs remain irrespective of approval.”
    In early May the draft transaction documents (comprising an incentive deed and a lease) were sent to Thorn’s lawyers. Following negotiations between the parties, Thorn signed the incentive deed and lease. The next day, Thorn’s lawyers again sent two signed copies of the lease and one signed copy of the incentive deed. Attached with the signed documents was a cover letter which referred to “formalising the arrangements”. Under this agreement, Thorn proposed arrangements which would include Centuria sending Thorn a scanned copy of the documents signed by Centura as landlord, and if the tenant was satisfied at that point, they would authorise Centuria to exchange and date the incentive deed and date the lease.

    Centuria did not agree to these conditions. Following subsequent discussion, the parties agreed that Centuria would arrange execution of both counterparts and then would arrange registration of the lease, and upon completion, documents would be sent to Thorn. This meant there would be no exchange of counterparts.

    As requested by Centuria, Thorn provided another signed incentive deed, attached with the required bank guarantee provided as security for Thorn’s obligations under the lease and incentive deed. However, Centuria could not promptly proceed with its execution due to COVID-19 lockdown restrictions. Consequently, Thorn decided to withdraw.

    Centuria argued against Thorn’s withdrawal, stating they were bound by the terms of the lease and incentive deed as signed and delivered by Thorn.

     

    What did the court decide?

    The critical question for the Court to decide was to determine was whether the tenant had displayed an intention to be bound immediately on execution and delivery of the deeds.

    Presiding Judge, Darke J determined Thorn did not intend to be immediately bound on delivery of the deeds. Darke reached this conclusion for various reasons. Most importantly, he noted:

    Under the heads of agreement, both parties had a specific right to leave the negotiations at any time until any formal documents had been signed.
    An intention for Thorn to be immediately bound was not evidenced by simply signing the deeds and sending them electronically prior to the submission of the original signed documents.
    When Thorn had submitted the original documents with only one signed copy of the incentive deed it was believed that Thorn was intending that the exchange of the incentive deed would be the first act giving rise to legal rights and obligations. Thorn did not intend to become bound by the Lease (even conditionally) before being bound by the Incentive Deed. In addition, the submission of a second incentive deed was merely procedural and did not manifest this intention to be bound.
    This case follows a similar judgement to the case of Pittmore Pty Ltd v Chan [2020] NSWCA 344, and also reconsiders principles found in Realm Resources v Aurora Place Investments [2019] NSSWC 379. Where an intention to be bound exists, a party will be bound by the deeds on delivery. This will be the case regardless of whether a deed is delivered unconditionally or delivered to be held in escrow.

     

    Key point to note

    Ultimately, physical delivery of signed deeds does not alone evidence an intention to be immediately bound. The words, conduct and facts surrounding the execution are required to be examined to ascertain a party’s intention.

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