Artboard 1Icons/Ionic/Social/social-pinterest

Signing documents in a WFH world – NSW moves into digital mode

27 April 2020

#Corporate & Commercial Law, #COVID-19

Lyn Nicholson

Published by Lyn Nicholson, Janelle Moussa

Signing documents in a WFH world – NSW moves into digital mode

Due to COVID-19, and government recommendations around social distancing measures, there is wide-spread working from home (WFH). The practical implications of WFH are that it may not be possible for all signatories to be physically present and provide a ‘wet ink’ signature. This raises questions regarding how to effectively sign documents in these circumstances and whether electronic signatures are considered legally enforceable.

General rules around signing documents

Generally, the appropriate method of execution will depend on the type of document, form of signature and the general context in which the document is being executed.

For instance, an agreement can be in electronic form and executed by way of electronic signature. However, in NSW, a deed must be signed, sealed and attested to by at least one witness who is not a party to the deed[1]. Legislative reforms in NSW have expressly permitted deeds in electronic form with electronic signatures and attestation[2]. However, there is still some doubt in relation to whether the provision for electronic deeds applies to deeds executed by a company under section 127 of the Corporations Act 2001 (Cth) (Corps Act).

The provisions of the Electronic Transactions Act 1999 (Cth) relating to electronic signatures do not apply to the Corps Act[3]. However, courts have indicated that electronic signature is possible under section 127(1) provided it is ‘personally authenticated’ by the company officer and provided that both company officers have signed the same static document[4]. What seems to be required for a valid electronic execution under section 127, is that the company’s Board specifically authorises the affixing of signatures to the deed and that there is some other evidence of the specific authorisation of the electronic execution of the deed by the executing officer themselves[5].

Legislative reform in NSW

In light of the restrictions on interpersonal contact due to COVID-19, the COVID-19 Legislation Amendment (Emergency Measures) Act 2020 (NSW) (COVID-19 Act) was recently enacted. The Act amends the Electronic Transactions Act 2000 (NSW) (ETA) by creating a power to make regulations under various specified Acts in relation to alternate arrangements for signing and witnessing documents.

However, regulations can only be made if:

  • Parliament is not sitting (or is not likely to sit within two weeks)
  • the alternate arrangements provided by the regulations are in accordance with the advice of the Minister for Health and Medical Research or the Chief Health Officer.

Regulations made in accordance with the COVID-19 Act expire six months after they commence, unless earlier resolved by Parliament.

On 22 April, the NSW parliament published the relevant regulations to allow witnessing to be by audio visual link, i.e. technology that enables continuous and contemporaneous audio and visual communication between persons at different places, including video conferencing[6].

This will ease issues in signing documents. However, for the witnessing to be effective there are further conditions to be satisfied.

These include that a person witnessing the signing of a document by audio visual link (the witness) must:

  • observe the person signing the document (the signatory) sign the document in real time
  • attest or otherwise confirm the signature was witnessed by signing the document or a copy of the document
  • be reasonably satisfied the document the witness signs is the same document, or a copy of the document signed by the signatory
  • endorse the document, or the copy of the document, with a statement:
  • specifying the method used to witness the signature of the signatory
  • that the document was witnessed in accordance with this Regulation.

For example, a document may be endorsed with a statement that the document was signed in counterpart and witnessed over audio visual link in accordance with clause 2 of Schedule 1 to the Electronic Transactions Regulation 2017.

A witness must confirm the signature was witnessed by either:

  • signing a counterpart of the document as soon as practicable after witnessing the signing of the document; or
  • if the signatory scans and sends a copy of the signed document electronically—countersign the document as soon as practicable after witnessing the signing of the document.

As well as contracts, this will provide relief for individuals who in these uncertain times wish to update their wills, powers of attorney or directions relating to health care.

The Queensland Parliament has also passed  the COVID-19 Emergency Response Bill 2020 which gives the Queensland Government the power to make regulations allowing the witnessing of documents remotely by way of video conferencing. Click here to read more.

Approach of the UK

In the United Kingdom, the uncertainty surrounding electronic signatures was recently addressed when the Lord Chancellor confirmed that electronically signed deeds were legally binding in England and Wales, even when a statutory requirement for a signature predated the digital age.

In the written ministerial statement released on 3 March 2020, the Lord Chancellor confirmed the conclusions of the Law Commission’s 2019 report on Electronic Execution of Documents which found that in most cases “electronic signatures are capable in law of executing a document (including a deed) provided that the person signing intends to do so and that any further required formalities, such as a witness, are satisfied”.

In supporting the Law Commission’s report, the Lord Chancellor stated that electronic signatures “are permissible and can be used in confidence in commercial and consumer documents”.

What is the next normal?

Whether an approach such as that in the UK may be adopted in Australia remains to be seen, however given the COVID-19 pandemic is constantly evolving and electronic execution will be of increasing relevance, this is certainly a space to watch.

Authors: Lyn Nicholson & Janelle Moussa

[1] Conveyancing Act 1919 (NSW), s 38(1).
[2] Conveyancing Act 1919 (NSW), s 38A.
[3] Electronic Transactions Regulations 2000 (Cth), sch 1; Electronic Transactions Act 1999 (Cth), s 7A.
[4] Bendigo and Adelaide Bank Limited v DY Logistics Pty Ltd [2018] VSC 558, [54]; Bendigo and Adelaide Bank Limited v Pickard [2019] SASC 123, [63].
[5] Bendigo and Adelaide Bank Limited v Pickard [2019] SASC 123, [69], Bendigo and Adelaide Bank Limited v DY Logistics Pty Ltd [2018] VSC 558, [54].
[6] Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (NSW).

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Lyn Nicholson

Published by Lyn Nicholson, Janelle Moussa

Share this