Execution of contracts using electronic signing and witnessing – latest development on COVID-19 law reforms

Blog written by King & Wood Mallesons.

In the wake of the COVID19 pandemic, a welcome development has been temporary legislation passed by the Commonwealth and some States (“COVID-19 legislation”) to facilitate the execution of contracts using electronic signatures and audio-visual witnessing.  This legislation overcomes uncertainties in the law on electronic execution of deeds, and remote witnessing.

The focus of this blog, and our other white papers, is contracts (ie deeds and agreements).  We have not discussed other documents such as affidavits, statutory declarations and court documents. There is some COVID-19 legislation which allows for electronic execution and audio-visual witnessing of such documents but the table below only includes legislation which allows for the execution and audio-visual witnessing of contracts.  We also do not discuss the issues around registration of land mortgages and other dealings with land which are registrable with land titles offices over the counter or through the electronic platform Property Exchange Limited (“PEXA”) as this raises technical and procedural issues which vary across jurisdictions.

Latest developments on COVID-19 legislation

UPDATE (11th June 2021): 

We're pleased to announce that the Commonwealth, State and Territory Treasurers has agreed to prioritise working together towards a common approach for document execution. It’s a key contribution to the Government’s Deregulation agenda, and the Deregulation Taskforce’s Modernising Business Communications deep dive. Find out more here.

The temporary measures introduced under COVID-19 legislation in VIC have been made permanent and the COVID-19 legislation in QLD has been extended for another 6 months. The VIC legislation validates the use of electronic deeds, electronic signatures on deeds and permits witnessing of a broad range of documents (including deeds and agreements) by audio visual link. The QLD legislation validates electronic deeds, electronic signatures on deeds and permits witnessing of certain documents by audio visual link.

Temporary measures, which were introduced by the Commonwealth government to overcome uncertainties in the law on electronic execution by companies under s127 of the Corporations Act 2001 (Cth) (“Corporations Act”), unfortunately expired due to unexpected inaction by the Commonwealth government before its expiration.  The Commonwealth government had issued draft legislation to extend the temporary reforms to s127 and indicated that the changes would be made permanent before the temporary measures expired. Unfortunately, the draft legislation was not passed in time. As a result, the pre COVID-19 position on electronic signing under s127 applies, which leaves open the ambiguity of whether a “document” for the purposes of s127 must be a paper document thereby precluding the use of electronic signatures in those specific use cases. Given previous statements from the Commonwealth government that they intend to make permanent reforms to s127, there is a general confidence in industry that legislation to permanently clarify that electronic signatures can be used under s127 will be passed by the government once the legislature is back in session later this year.

While developments in VIC and QLD and the anticipated passage of s127 legislative reform are encouraging reaffirmations of the broad acceptance of electronic signatures in Australia, the Australian Banking Association, together with other organisations including King & Wood Mallesons and Docusign, continue to engage with the Commonwealth and the States and Territories, to advocate for further broad and consistent adoption throughout the country of electronic signatures.   

Status of COVID-19 legislation

The current COVID-19 legislation which allows for the electronic execution of contracts and audio-visual witnessing is set out below.  Further information can also be found at http://docusign.com.au/electronic-contracts and https://www.docusign.com.au/white-papers/promoting-greater-usage-of-electronic-contracts-and-electronic-signatures-under-australian-law.

Legislation

Amendments

Status

CTH

Corporations (Coronavirus Economic Response) Determination No. 3 2020 (Cth)*

Modifies s127 of the Corporations Act to permit split execution, modified split execution and electronic execution of deeds and agreements by company officers

Unexpectedly allowed to expire on 21 Mar 2021. 

Draft legislation to extend these temporary measures until 16 September 2021 was released: see the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 (Cth). However, the Bill was not passed.  It is hoped that the temporary measures will be reinstated once the legislature is back in session with permanent legislation to follow later this year.

NSW

Stronger Communities Legislation Amendment (Courts and Civil) Act 2020 (NSW)

Includes provisions in the Electronic Transactions Act 2000 (NSW) to permit witnessing of a broad range of documents (including deeds and agreements) by audio visual link

Note that since November 2018, the Conveyancing Act 1919 (NSW) has permitted a deed signed by an individual to be in electronic form and electronically signed and witnessed. However, it also requires that a deed signed by an individual must be witnessed and the legislation does not clarify how the signing of an electronic document should be properly witnessed.  The regulations allow witnessing to take place by audio-visual link.

Expires on 31 Dec 2021, but previous experience suggests it will be further extended if required.

QLD

Justice Legislation (COVID-19 Emergency Response— Documents and Oaths) Regulation 2020 (Qld)

Validates electronic deeds, electronic signatures on deeds and permits witnessing of a limited range of documents by audio visual link

Extended by Part 5 of the COVID-19 Emergency Response and Other Legislation Amendment Act 2021 (Qld) and s4A of the COVID-19 Emergency Response Act 2020 (Cth).

Expires on 30 Sept 2021, but previous experience suggests it will be further extended if required. 

VIC

The Justice Legislation Amendment (System Enhancements and Other Matters) Act 2021 (Vic)

Amends the Electronic Transactions (Victoria) Act 2000 (Vic) and other legislation to validate electronic deeds, electronic signatures on deeds and permit witnessing of a broad range of documents (including deeds and agreements) by audio visual link

This legislation has no expiry date.

As noted above, the table lists all relevant COVD-19 legislation that allows for the electronic execution and audio-visual witnessing of contracts. The legislation listed in the table, and legislation in other jurisdictions, may cover other types of documents such as affidavits, statutory declarations and court documents. For example:

• In ACT, the COVID-19 Emergency Response Legislation Amendment Act 2020 (ACT) permits witnessing and attestation of a limited range of documents by audio-visual link. These documents are affidavits, wills, health directions under Medical Treatment (Health Directions) Act 2006 and general powers of attorney or an enduring powers of attorney.  They do not include contracts.

• In WA, the COVID-19 Response and Economic Recovery Omnibus Act 2020 (WA) allows witnessing of documents under certain legislation to take place by audio-visual means (eg affidavits) and various other processes to take place by electronic means (issue of certain notices, lodgement of these or the giving of evidence).

• In SA, the COVID-19 Emergency Response (Section 16) (No 1) Variation Regulations 2020 (SA) has suspended the witnessing requirement for land mortgages.

• In NT and TAS, as of the date of this blog, no regulations have been passed impacting the validity of electronic signatures.