Welcome

Ian Hendey

Chief Practitioner Services Officer, PEXA

Welcome

Brought to you by

Marcus Price

Chief Executive Officer, PEXA

Welcome

Brought to you by

Bob MiljevicPartner

Sharon Christensen

Gadens Professor of Property Law

QLD University of Technology

Electronic Digital and Smart Contracts

Electronic, digital and smart contracts

Prof Sharon Christensen

Gadens Professor of Property Law QUT

Digital Horizons – Property Innovation

Two questions

• Is a land contract in electronic or digital form legally binding?

• What is the impact of increasing automation on the principles applying to contract performance?

Contract Law [R]evolution

telex

1950

Instantaneous communication rule -Entores

1955

fax

1960

Fax – same rule -Reese Bros Plastics

1988

Email, internet, online contracting

1990 1999

Email in writing –McGuren

2004

Blockchain, self service automation/smart contracting, sharing platforms

2008-2014

Email same rule as fax – Olivaylle Pty Ltd

2009

Robotics

2016

Typed name a signature – electronic signing tool

2015

2019

Autonomy,

data, privacy

Electronic, Digital or Smart – what is the difference

Electronic contract

• Broad descriptor capable of referring to any contract formed using electronic means or represented in electronic or digital form

Digital Contract

• A subset of electronic contract maybe formed online, terms are visible on screen and computer code used to perform contract; eg. Purchase of software, music, games, movie tickets). Right to access personal contract details can be restricted - may be self-executing

Smart contract

• Self executing computer code usually associated with blockchain – terms of contract are converted to code no human intervention

Evolution to smart

contracts

Is the contract valid?

• A land contract in electronic or digital form must satisfy the same requirements:

• The terms of the contract must be in writing

• The contract or a memorandum of the contract must be signed

• Signed by the named party or an authorised agent

Can a smart contract fulfil these requirements?

A contract or memo ‘in writing’

Definition Physical form Electronic form

Writing Writing defined as “includes any mode of representing or reproducing words in a visible form”

• Letters• Formal paper contract

Email Contract displayedonline Contract in word or pdfText

• Courts readily accept that words displayed on a computer screen are reproduced or represented ‘in a visible form’

Electronic or digital contracts – ‘in writing’

Contract formed by exchange of emails

Contract in word or pdf displayed on a screen

Web based contract where terms are displayed on a screen

Smart contract – self executing code

When is a document signed?

A signature is an unique mark placed on a document to:

Identify the signer

Indicate the signers intention or approval of the contents

Provide integrity and reliability of evidence in event of a dispute

Electronic signature v. digital signature

Electronic signature –electronic symbol or process used to indicate intention or approval of a document

Digital Signature - a digital code (generated and authenticated by public key encryption) which is attached to an electronically transmitted document to verify its contents and the sender's identity.

Digital certificate issued by certification authority (CA)

Identity verified by CA

Changes to document after signing invalidate the signature

When is an electronic or digital contract signed?

Doubt about ability of electronic signature to meet CL

requirements

Courts have applied the ETQA

Functional analysis

Electronic communication is signed if, signing method:

• identifies the party or their agent;

• indicates their intention to be bound to the contract;

• As reliable as appropriate to prove identify and intention

• Consent is given by the other party to the signature method.

Electronic signatures and ETQAMethod Identity Intention Reliable proof of identify and intention

Typing name yes Yes (if intention to sign contract bytyping a name)

Easily copied or changed

Facsimile of signature attached to document

Yes Yes (as above) Can be placed on document by any person with access

Electronic signing tool Yes Yes (if signed contract as indicated)

Relies on valid email address as identifierMFA may be used (email and SMS)Signing place and time is recorded in system

Digital signature Yes Yes Identity certified by TSPDigital certificate proves signed by names personChanges to document easily detectedTime stamp difficult to alter

Other jurisdictions compared

• Different types of e-signature given different evidential value

• Simple, advanced, qualified (deemed same as manuscript signature)

EU (eIDASRegulation)

• E-signatures given legal validity and admissible in court

• No distinction between types of signatureUSA

• Electronic Communications Act – provides for admissibility of e-signatures

• Validity is based on common law principlesUK

Improving reliability of signing method

• Reliability of signing method to prove identity and intent can be improved by collecting extrinsic evidence:

• Verifying the identity of the signer and their connection to the signing method

• Using MFA (or OTT) to lower risk of a third party signing without authority

• Obtaining evidence of an agent’s authority to sign

• Use a PKI digital signature

Automation of performance

Impact on contract principles

IF PERFORMANCE OF A CONTRACT IS AUTOMATED DOES

THIS MAKE THE CONCEPT OF

BREACH BY THE PARTIES AND THE

ABILITY TO TERMINATE

REDUNDANT?

IS THE CONCEPT OF TENDER

DIFFERENT FOR AN ELECTRONIC SETTLEMENT?

IF THE AUTOMATION

FAILS AND PERFORMANCE

DOES NOT OCCUR ON TIME, WHAT ARE THE

CONSEQUENCES?

Release 2 Payment Settlement: Process Overview

Title Activity

Check

(1hr Prior)

Lan

d R

egis

try

PEX

A

Lodgement

Case Status

Advice

Sub

scri

ber

Settlement

Preparation

Funds

Reservation

Lodgement

in LR

Funds

ExchangeDisbursement

Lodgement

Request

Verify

Funds

Availability

OSR

RB

A Reserve

Source FI

ESA Funds

Exchange

Funds

Between ESAs

Sign

ScheduleFI

Stamp Duty

Verification

(1hr Prior)

Debit Trust

Account

Move Source

Funds to

Clearing Acct

1 2 3 5 64 7

Disburse

Funds to

Beneficiaries

Authorise

funds

Workspace locking

PEXA Settlement

Workspace locked

Tender

Seller – signed transfer and releases of encumbrances

Buyer – balance purchase price

Tender is evidence of being ‘ready willing and able’ to perform

A party to a conveyance is required to tender performance in accordance with the contract

Electronic Tender

Same principle – tender at settlement is required

Actions are different – what a party is required to do depends on the contract terms

A party should complete all acts required by the contract and will be excused from requirements prevented by conduct of the other party

Example:

Seller is prevented from signing a transfer because details are not completed by the buyer.

Provided seller has otherwise performed all required steps by time for settlement, seller is ready willing and able to perform

Breach and termination

• Data input error (mistake in description or financial error)

• Process is stopped by a party without grounds

• Failure to complete pre-automation steps

Potential breach where performance

is automated

• Breach prior to automated performance

• Discovery of breach before automation complete

• Can the automated process be halted? Are contract terms for compensation or retransfer required?

Termination for breach

Computer automation fails

Risks

• Computer system fails at relevant time

• Corruption of computer code/virus/attack – causing a failure to complete or transfer to wrong party

Consequences

• No fault of either contracting party

• Force majeure provisions may be required

• Unlikely a frustrating event at law

Insurance?

Smart contracts – The future?

One vision

Questions

Alex Tilley

Cyber Crime Expert

Secureworks

Cyber Security

Classification: //Secureworks/Confidential - Limited External Distribution:

Business Email Compromise (BEC)

Structure and evolution

Alex Tilley atilley@secureworks.com

Graham Link

Chief Technology Officer, PEXA

Tech Talk

Brought to you by

To share with you [a] view on what the future of property

conveyancing might look like in an accelerating digital

environment

Move in

PEXA is one part of a broader collaborative shift to a digital

property ecosystem

Listing Websites/Real Estate Agents

ValuersInformation

ProvidersBanks

Conveyancing Software

Lodgement & Settlement

Land RegistriesSell house

Stepping back for a moment

Innovation and disruption is brought to life at the intersect of

industry, government, academia and collaborators

2013: 39% 2018: 55.1%

Putting these building blocks together

Accelerating innovation

Compounding technology

Equitableaccess

So lets take a look at some of the Technology

trends in 2019 and the future

Cloud

Trend 1 – Rise of Cloud Computing

Trend 2 – Investment into faster and higher capacity networks

5G

Trend 3 – Internet of things

IOT

Trend 4,5 & 6

Technology continuing to augment human behavior in more meaningful ways

Artificial

Intelligence

Machine

Learning

Robotic

Process

Automation

Putting this together

Cloud based technology is enabling the creation of Platforms

Smart Buildings with IOT

Machine Learning for workflow, risk calculation and judgement calls

Digital Identity

Further Reading

Deloitte Access Economics

The Future of the Australian Conveyancing industry 2025 and 2030

https://www2.deloitte.com/au/en/pages/economics/articles/impact-e-conveyancing-industry.html

Q&A Panel

Sharon Christenson - Professor, QLD University of Technology

Alex Tilley - Cyber Crime Expert, Secureworks

Graham Link - Chief Technology Officer, PEXA

Brought to you by

See you back here at 3pm

Enjoy Your Break!

AFTERNOON TEASee you in 30 minutes

Krystle Kocik

Executive General Manager, Product

PEXA

PEXA Products

Brought to you by

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BREAKER

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• Fraud that occurs in the property industry is not unique

• The biggest culprit is email

• Interception and manipulation of financial information

(BSB/Account numbers) - vendor surplus and trust

account information have been targeted

• It is imperative to provide a solution to the industry which

eliminates email exchange of sensitive information

where security is the backbone of the technology

Exchanging sensitive information through a secure channel is

critical. Email is not secure.

Using human centred design, practitioners, buyers and sellers were

embedded throughout the lifecycle of developing PEXA Key.

We uncovered many insights and heard consistent themes.

Communication &

TransparencyTrust

Security Education

Buyers/sellers want to know key

events about settlement.

Practitioners are concerned about

sharing too much information

which can cause anxiety. Higher

expectations from buyers/sellers.

Reputation heavily influences

trust. Complexity and legal nature of

the process, places high value on

the practitioner’s role.

Practitioners see the importance

of secure communication.

Buyers/sellers still think email is

secure.

Buyers/sellers want the ability to

find out more about what happens

during settlement. They want to

know what to do next.

We pieced these together and tested what an MLP might look like

• Interaction point for practitioners is through PEXA –

• Inviting clients

• Request account information

• Secure and robust registration for buyers and sellers

• Settlement date/time and high level status visibility

• Exchange bank account information securely:

• Sellers: Vendor surplus

• Purchasers: Trust account information (coming soon..)

• “What to expect” – providing generic information on what

happens during settlement

Introducing PEXA Key, an app (Apple & Android) for buyers and sellers

targeted at helping our members and their clients interact securely.

Come see me to join the pilot!

Brought to you by

How PEXA is putting the voice of members at the heart of the

business to deliver great product and service experiences

Community and Member Experience

Emily Billing

Customer Engagement Manager

PEXA

© Property Exchange Australia Ltd 2016

Join the 5700+

Community members

who are already signed

up and participating!

Community.pexa.com.au

Discussion Boards PEXA Certified Help Articles Product Updates Transfer Guidelines

© Property Exchange Australia Ltd 2016

454

QLD Members

384

Posts contributed

Product Member Panel

170

Help articles

Downloadable Help Cards

Community.pexa.com.au

QLD Specific Resources

• These webinars will be repeated 4 times this year

• 24 national webinars

• Covering a variety of topics including Financial

settlement schedules, priority notices, transfer

guidelines and more

Access the e-Conveyancing Community at:

Community.pexa.com.au

Brought to you by

Listening to our

members

What we measure:

• Would you recommend PEXA to your peers

• How easy was it settle on PEXA

• How other parties in the workspace are behaving

• General feedback suggestions

Provides visibility to PEXA employees on what you’re experiencing

Helps to drive prioritisation and direction for our product teams

What does this mean?

© Property Exchange Australia Ltd 201673

• Share your feedback and thoughts with PEXA

• Let our product teams know what would help you

How you can get involved

Panel Session

Antonia Mercorella (MC) - Chief Executive Officer, REIQ

Craig Green - Senior Partner in Banking and Finance, Gadens

Brigid Leishman - Chief Operating Officer, Credit Union Australia

Justin McInally - Partner, Hopgood Ganim Lawyers

Damien Ross - General Sales Manager, QM Developer

See you back here at 3pm

Enjoy Your Break!

THANK YOU