Bryce Figot, special counsel for DBA Lawyers, said although some states have now legislated for the use of electronic signatures on SMSF deeds, it is still best practice to also obtain wet signatures because if litigation does eventuate, there may be differences in the state-based rules that apply.
Mr Figot said NSW and Victoria have legislation that allows for the electronic execution of deeds, but ultimately “you don’t know where your client’s executor ultimately will be when the client dies” and whether the same laws will apply.
“In most jurisdictions, you need to have two signatures [on the deed] and in NSW and Victoria, there’s no requirement to have a witness,” he said.
“However, it’s best to always have an independent witness, and you want to have the deed to have the date of execution to satisfy regulations all around the country.”
He said the case Booth v Cantor Management Services Pty Ltd (Unreported, Supreme Court of South Australia, Bochner J, 18 March 2016), shows the difficulties that can arise if there is litigation in a different state than that in which the deed was signed.
In this case, the deed was originally executed in Queensland and there was an assumption that it would therefore fall under Queensland law. However, the case was heard in the South Australian court system.
The deed specifically stated, “This deed is governed by the laws of the State or Territory of Australia in which this Deed is executed and all interested persons accept the jurisdiction of the Court of that State or Territory”.
The judge decided that the clause quoted above was: “… non-exclusive. It does not expressly provide that any action in relation to the fund must only be commenced in the State in which the deed was executed”.
“The case illustrates that unexpected outcomes can occur. It is difficult to predict with real confidence which jurisdiction will apply. Therefore, it is best to have a practice that will satisfy all jurisdictions,” said Mr Figot.
He added that it is impossible to predict who the executor of an SMSF will be when a trustee dies, or in what jurisdiction that person, or persons, may be living, so even though electronic signatures may be legal, it is best to also ensure that any deed is signed “the old fashioned way” as well.
“You have to print out the entire document and get an old-school, hardcopy wet signature, the exact same way people would have done it years ago,” he said.
This is the most common sense advice I have read in a long time!
Most of us are sick and tired of this woke, cancel, Covid-inspired electronic signing, work from home, AI, near-enough-is-good-enough culture that is ruining the professions!
Good on you Bryce!