Ease Restrictions On Signing Legal Documents in Current Pandemic

With the unprecedented emergency brought about by the COVID-19 and the release of the Epidemic Preparedness (COVID19) Notice 2020, has come a uprising in the use of electronic gadgets to sign legal documents, both unsophisticated, such as email, and sophisticated and secure, such as digital signing systems, as people scramble to find alternative ways to make documents they sign legally binding during this period of mandatory self-isolation.

Subject to certain conditions being met, in most situations electronic signatures are given the same weight as paper-based written signatures. Electronic based signatures have been legal for some time under the Contract and Commercial Law Act 2017 and before that, the Electronic Transactions Act 2002. Some key exceptions are oaths, wills, and declarations, and powers of attorney. Legislation governing the signing and witnessing of these contemplates that the signing party is in the physical presence of the witness.

Regulatory relief came on Friday in the form of two modification orders made under the Epidemic Preparedness Act 2006, temporarily relaxing the rules for signing wills and oaths and declarations.

IMMEDIATE MODIFICATION ORDER 2020

Wills can be witnessed and witnessed via an audiovisual link while the Epidemic Notice is in force. Clause 4 temporarily modifies section 11 of the Wills Act 2007, mandating that it must be made clear on the face of a will that it has been signed and witnessed in this way because the Epidemic Notice is in force. A photograph or scanned copy of all copies of the will must be sent to one designated holder.

It temporarily allows oaths, declarations and affirmations to be taken via an audio link or audiovisual. The person witnessing the oath, declaration or affirmation is not required to physically sign the same document as the person making it. The order also permits organisations that get statutory declarations to authorise some of their employees temporarily to take the declarations rather than requiring a legal counsel or other person normally authorised to do that.

Powers of attorney

Despite indications that regulatory changes could be made to permit powers of attorney to be signed from home, as it currently stands, they remain excluded under part four of the Contract and Commercial Law Act 2017. The logistics of signing powers of attorney are such that the person granting a power of attorney is needed to assemble at least three other people – one lawyer and two witnesses. It shows that many of those people who may wish to grant a power of attorney, particularly those who are in sick or may be close to losing capacity, will find this not easy, if possible, under lockdown. The New Zealand Law Society guidance remains the best practice in the meantime.

The exclusion of powers of attorney has another less obvious consequence. Many lending and security documents contain a form of power of attorney provision in favour of the bank. As banks scramble to get their heads around the logistical issues relating to the Level 4 lockdown, some are not agree to accept documents that have not been signed in ‘wet-ink’, seemingly on the basis that their powers of attorney might be found to be invalid. This is, in turn, hampering the capacity to complete financing transactions.