The future is here – Paperless Conveyancing

The future is here – Paperless Conveyancing

A standardized national conveyancing system has been implemented in Australia to allow numerous property transactions to take place entirely paperless via the online platform Property Exchange Australia (PEXA).  Paperless conveyancing is now available in all States and Territories except South Australia, which will join in 2016.  The privately-owned PEXA is anticipated to handle 60 – 70% of all conveyancing transactions in Australia once fully-integrated into every day legal practice.

Continuing our commitment to take law out of the past and into the present and to provide our client’s with expedient legal service, JHK Legal has embraced this move towards electronic conveyancing and is in the process of incorporating PEXA into the firm’s practice.  This exciting development will enable a client’s transaction to move expediently with less “hands on” involvement from the client.

PEXA creates a single land titles registration system.  It is not replacing the current land law in Australia, rather it makes it possible to settle a conveyance of real property electronically and to lodge all required documents online with the land registry.  Each State and Territory retains its existing real property laws but via new legislation in each state will be allowed to effect transfers online subject to the national Electronic Conveyancing National Law (ECNL) and associated regulations.

What does this mean for clients?

  1. Electronic documents are as valid as paper documents and once submitted via PEXA will have the same status as if signed original paper documents – for example, you will no longer need to sign a Form 1 and Form 24 Transfer and hand over originals at Settlement. These will all occur online.
  2. Solicitors are authorised to digitally sign documents on behalf of their client once the solicitor obtains “client authorisation” which is a process whereby the solicitor must verify the client’s identity and establish that the client has authority to provide instructions to purchase/sell the property.
  3. Digital signatures are able to be used by the person designated as the “signer” for a subscriber. Only certain parties can be a subscriber, these include financial institutions, lawyers and conveyancers.  In Queensland, only a legal practitioner can be a “signer” for a subscriber.  Once a digital signature is applied to a document:

a) the document will be deemed signed by the subscriber; .

b) the signature is binding on the subscriber and any person whom the subscriber is acting under client authorisation; and

c) the signature of the subscriber may be relied upon by each party to the transaction.

So, practically, how will this work?

To illustrate, John decides to sell a house to Paul.  They execute a contract and tick that they consent to the transaction being completed by PEXA.  Paul is self-financed.

  1. John brings us his contract. We note that it is a PEXA contract.  We complete the “client authorisation” process with John allowing us to sign all documents on his behalf electronically.
  2. Paul takes his copy of the contract to XYZ Lawyers who are also registered for PEXA. They similarly complete the “client authorisation” process with Paul to enable them to sign all documents on his behalf electronically.
  3. The firm (each being subscribers) generate all transfer documents required to complete the sale electronically and when instructed by their client the authorised signer places a digital signature on those documents which is deemed binding on their client.
  4. At settlement, a live portal is opened whereby both solicitors are logged in. XYZ Lawyers do a real time transfer of the funds for settlement to our firm’s trust account and pay the OSR (also on PEXA).  On seeing the transfer of funds completed, we authorise lodgement of the transfer to the titles office digitally.
  5. The transaction is complete. No multiple communications of documents and need to get JP witnesses for the parties.
  6. Once funds are cleared in account, they are released to John.
  7. Paul now owns the Property.

Where to from here?

All new things take time to adjust to and the use of PEXA is no different.  Both parties have to consent to using PEXA otherwise the current paper based system will continue to apply.

There are still some transactions which will not be able to be done via PEXA, but standard “cottage” conveyancing is capable of full digitalisation and represents a more cost and time efficient method of completing transactions.

If you have any questions about this article, please contact our Brittany Biron on 07 3859 4500 or [email protected] for further information.

 

Author: Brittany Biron, Lawyer.

Published: March 2016

Contracts of Insurance: Your Rights and Interests

Until now, litigation arising from motor vehicle collisions also known as ‘Crash ‘n’ Bash’ litigation instigated more often than not, by the Insurer of one of the motor vehicle, as a debt recovery action, has not legally been able to be named in the proceedings. Most Insurance Policies list as a term that should legal proceedings be instigated as a result of a motor vehicle collision, it is the owner and/or driver of the insured vehicle that will be named, and not the insurance company (Insurer) on the legal documents.

Assignment within Insurance

What we are seeing now are cases where the Insurer is being named and sued directly. Litigation of this nature arising when, without the knowledge or authorization of the Insurer, the Insured enters into a Deed of Assignment purporting to assign to a Third Party Repairer (Repairer) all “rights and interest under the Contract of Insurance to claim against the Insurer in respect to (the) claim”

Consider this scenario:

  • Policy of comprehensive motor vehicle insurance with the Insurer of choice, covered by an Insurance Certificate;
  • Motor vehicle was damaged whilst covered by the Insurer;
  • The Insured lodges a claim under the insurance policy;
  • The Insurer undertakes an assessment of the damaged vehicle, and compiles a quotation of the repairs;
  • Without the Insurer’s knowledge, the Insured obtains an alternative quote from an alternative repairer;
  • A disparity exists between the two quotes; the quote obtained by the Insured is significantly higher than that obtained by the Insurer; and
  • Without the Insurer’s authorisation, the Insured enters into a Deed of Assignment purporting to assign to
  • the repairer all “rights and interest under the Contract of Insurance to claim against the Insurer in respect to (the) claim”.

The Insurer has never authorised the repairs to the Insured’s vehicle, nor implied any intention to pay the repairer for works allegedly conducted under the Deed of Assignment. If the Insurer did not authorize the repairer, do the terms of the insurance policy protect the Insurer, or is the repairer entitled to recover directly from the Insurer?

Surely without the Insurer’s authorisation for the repairs, the Insurer’s responsibility, if any, is limited to the amount of the Insurer’s own assessment of damages – the lesser of the two in this scenario. If paid by the Insurer to the Insured, who is responsible for the difference between that and the actual amount of repairs conducted under the alleged Deed?

The two issues to be considered:

  • the validity of the assignment; and
  • if the Insurer did not authorise the repairer, do the terms of the insurance policy protect the Insurer, or is the repairer entitled to recover directly from the Insurer?

In order to comment on these matters, it is necessary first to consider the Insured’s position under their policy before moving to the question of any assignment of rights. The Product Disclosure Statement contained within most Insurance Policies outlines the Insured’s entitlements.

In this scenario the basis of cover states that:

  • only with the authorisation of the Insurer can the Insured nominate a repairer of choice; and
  • the quotation provided by Insured’s nominated repairer must be competitive; else the Insurer can decide to instruct another repairer.

Failure to obtain prior authorisation

However, just because the Insured may have failed to obtain authorization before conducting the repairs does not necessarily mean that the Insured has breached any policy terms. These terms do not prohibit the repairs being undertaken without the authorization of the Insurer, but rather identify exactly when the repairs shall be paid for, hence the introduction of s.54(1) of the Insurance Contracts Act, 1984.

If the policy is questioned, s.54(1) requires an examination of the prejudice caused to the Insurer by the Insured failing to obtain the Insurer’s authorisation and reduces the amount of the claim to a sum that fairly represents the extent to which the Insurer’s interests were (so) prejudiced. Here, the prejudice would be represented by the differential between the Insured’s repairer’s cost of repairs and the lower sum as provided for by the Insurer’s assessment.

Alternatively, the Insurer could offer a ‘cash settlement’ to the Insured for their assessed cost of repairs, not only because this is the authorised sum, but because the Insurer believes the nominated repairer’s quotation is not competitive. If the disparity between the two amounts is of such a magnitude, there exists a suggestion that the higher figure could be outside the parameters of the competitive market place.

Such a test of competitiveness is objective rather than subjective following from an ordinary and natural interpretation of the provisions, and the pure belief of the Insurer. Hence, the onus of proving that the repairer’s figure is not competitive solely rests with the Insurer. Especially given that it is the Insurer, itself, that seeks the benefit of a clause within its own policy limiting its own liability. In order to be able to satisfy a court that it was entitled to settle the Insured at the lower figure, the Insurer would also carry the onus of establishing that the lower sum represented the reasonable cost of a competent and guaranteed repair.

Has the Insured lawfully assigned their rights to the Repairer?

If so, can the repairer stand in the Insured’s shoes as assignee and prosecute a cause of action for the higher amount against the Insurer?

The Deed of Assignment seeks to assign to the repairer all of the Insured’s rights and interest under the Contract of Insurance to claim against the insurer. Accordingly, it does not purport to assign the policy, but merely the Insured’s right to recover under the policy. This right to recover is a legal chose in action, and may be assigned. A legal assignment of a chose in action requires express notice in writing (to be) given to the debtor, refer s.134 of the Property Law Act, 1958.

Whilst the failure to provide written notice does imply that a legal assignment has not been perfected, it does not necessarily mean that a valid equitable assignment of the right to recover has not occurred see Alma Hill Constructions Pty. Ltd. v Onal (unreported) [2007] VSC 86. In that decision, his Honour Kaye J deals with some conflicting authorities to conclude that, otherwise valid assignments of choses in action without notice pursuant to s.34 are enforceable in equity.

In this scenario the Insured’s assignment was valid in both law and equity as having bestowed a right upon the repairer to pursue the Insurer for the recovery of the Insured’s entitlements under the policy, with respect to this claim. Of course, Product Disclosure Statements differ between Insurers, and may in alternate circumstances purport to prohibit or limit any right of assignment on the part of the policy-holder.

 

Author: Shan Auliff

Published: April 2016