STATE governments have overwhelmingly rejected moves by Victoria to prevent solicitors and bankers from being directly involved in developing a national electronic conveyancing system.
The Victorian plan was rejected last week at a meeting in Sydney after it drew support from just one other state - Queensland.
Had it gone ahead, responsibility for building the proposed national e-conveyancing system would have shifted immediately to a committee of state government officials.
This would have sidelined the National Electronic Conveyancing Office, whose steering committee includes representatives from the Law Council, Australian Bankers Association, Australian Institute of Conveyancers and officials from federal and state governments.
The Victorian push would also have delivered a series of state-based systems instead of the national system favoured by the federal Government and business.
Victoria's plan was rejected at a meeting on May 12 in the offices of Mallesons Stephen Jaques that was chaired by former NSW premier Bob Carr.
Victorian officials had urged their interstate counterparts to accept a series of conditions before Victoria would share the intellectual property underpinning its state-based electronic conveyancing system.
Victoria's draft agreement found little support.
The original document, headed National Co-operation (Electronic Conveyancing) Agreement, covered 21 pages. Provisions covering about 15 pages were deleted at the insistence of the other states.
After the deletions, the meeting supported the establishment of a new legal entity to run electronic conveyancing. This replicates a decision that had already been taken by the steering committee of the National Electronic Conveyancing Office, the organisation charged with building the national system.
The name of the draft document was changed to "Agreement for national entity for electronic conveyancing".
The final resolution, which was certified by Mr Carr on May 14 as a correct record of the meeting, makes no mention of intellectual property and refers only to the establishment of a new legal entity.
However, Victorian Environment Minister Gavin Jannings, who is responsible for electronic conveyancing, issued a statement yesterday portraying this as an agreement to share intellectual property.
"At the meeting of state and territory and commonwealth officers on May 12, all states and the federal attorney-general's department agreed to a co-operation agreement for sharing the intellectual property in Victoria's electronic conveyancing system," Mr Jennings said.
"This continues the good progress that has been made towards a national approach to electronic conveyancing.
"This agreement will be considered by COAG as part of its progress towards a national outcome."
When told that this appeared to be at odds with Mr Carr's certified record of the meeting, a spokesman for Mr Jennings said "the big picture" was that there had still been agreement to move forward to the establishment of a national system.
Some of those at the Sydney meeting were disappointed that the Victorian Government had failed to deliver on an undertaking to produce an alternative business model for e-conveyancing.
Instead, Victorian officials had wanted the other states to first accept a new governance structure that would have locked them in to developing state-based versions of Victoria's system, which is known as ECV.
The role of the banks and other private sector users of conveyancing would have been downgraded to advisory groups.
Had Victoria succeeded, it would have eliminated the key industry group that is insisting that e-conveyancing be developed as a single national system.
The major banks fear that unless e-conveyancing is established as a seamless national system, big savings in the cost of property transactions will be at risk.
They are boycotting Victoria's ECV system out of concern that there has been insufficient progress on developing a national system.
The rejection of Victoria's conditions for the transfer of ECV's intellectual property is the latest in a series of setbacks for the state's system.
A preliminary review of ECV by information technology consultant Unisys found that it would need significant modification and enhancement to be suitable for NSW.
A legal opinion by Clayton Utz partner Mark Sneddon has identified potential gaps in compensation arrangements for those who lose money due to mistakes by ECV.
In March, the Standing Committee of Attorneys-General and Council of Australian Governments endorsed the need for e-conveyancing to be rolled out as a national system.
Despite's COAG's decision, the draft agreement presented to last week's meeting shows that Victoria was still seeking a series of systems that would differ from state to state.
One of the conditions that was rejected said "although the jurisdictions intend to aim for as much consistency as possible in the system as it operates across all jurisdictions, it is acceptable for there to be differences."
Another provision says "ECV Technical Solution will be the basis of the system recognising that jurisdictional differences are to beaccommodated through customisation".
Simon Libbis, executive director of the National Electronic Conveyancing Office, said he hoped COAG would now be able to push ahead with the work his group had done over the past 2 1/2 years.
"I hope they can move it forward and smooth over the jurisdictional differences that seem to be bogging us down," Mr Libbis said.
The draft agreement shows the Victorian Government was prepared to transfer the intellectual property in ECV for $3.7 million if it went to a new legal entity owned jointly by the states and structured along lines set down by Victoria.
ECV cost the Victorian Government about $40 million to develop. It has been used for one property transaction since its launch in November last year and has been accompanied by a sharp increase in government fees for paper-based conveyancing.
The draft agreement also implies that the Victorian Government might not own all of the software that supports ECV.
The other states refused to accept a provision in which they were asked to acknowledge that "in order to implement the system it may be necessary to procure hardware, software and services including ... third-party software with which the system's software has been designed to work such as digital signatures and database software".
If the other states had accepted Victoria's terms, the draft agreement says the state government would have identified the relevant third parties and introduced them to the other states.
The other states also refused to accept a condition that would have required them to accept that one company would be responsible for the electronic clearance and settlement of all payments associated with electronic conveyancing.
The draft agreement would have required the other states to give priority consideration to the company that currently operates the ECV clearance system.
That company is Austraclear, a wholly owned subsidiary of SFE Corporation.
The draft agreement would have required the other states to "collaborate in good faith, in the first instance, to assess the suitability of Austraclear to provide equivalent services in connection with the system".
On March 26, the Council of Australian Governments said electronic conveyancing was one of 12 areas in which "breakthroughs" had been achieved in regulatory reform.
Two days later, the Standing Committee of Attorneys-General said it "noted that COAG has agreed to the development of a national electronic conveyancing system".
The nation's attorneys-general also said they "noted the need for a national system to eliminate the costs and complexities of dealing with eight different systems".
Last weekend, federal Attorney-General Robert McClelland told a gathering of law firm managing partners that the decisions taken at COAG and SCAG would reinvigorate the e-conveyancing project.
"This initiative has the potential to generate benefits for all parties to land transactions," he said.
"A national system would again cut red tape. The legal profession, banks and consumers should all expect reduced costs."
Chris Merritt, Legal affairs editor | May 23, 2008 | The Australian
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