Saying goodbye to the Duplicate Certificate Title

The biggest problem, and this appears to have been overlooked due to all the other distractions and debates, is the duplicate title. If you are going to replace paper based systems with paperless electronic systems, you need to get rid of the duplicate title. The first step in paving the way for electronic conveyancing is eliminate the paper duplicate certificate of title. To do this, you need policy, legislation and implementation.

I just cannot see how electronic conveyancing can be introduced and work successfully unless the duplicate has been eliminated. If it just too hard to abolish the duplicate title, I really think we are better off thinking about other things, like cars, long weekends and other fun things.

At the moment there is no clear policy on dealing with the duplicate. And certainly nothing that goes close to a uniform national approach from all eight jurisdictions. Queensland has come closest to abolition of the duplicate, but even there it is optional for a party to request a certificate. Only a current title search will reveal if a certificate of title has been issued.

In Victoria, the duplicate certificate of title has not been abolished, but the issue was addressed in the context of electronic conveyancing which as we know is living in a state of limbo. But if we were to wake up one morning and find ourselves using the ECV system, one has to look at the requirements and standards that conveyancers must observe. The key provisions deal with identity and clients need to be properly identified to prove they and only they have the right to deal with the land on the Register. The Transfer of Land Act was amended with the insertion of section 27AB Verification of Identity.

The Registrar is not required to register an instrument under section 27A if the Registrar is not satisfied as to the identity of any person by or on behalf of whom the instrument was executed.

Item 3.3 of the gazetted Registrar's requirements for subscribers to identify a client, being an individual are at least 100 points in accordance with Schedule 6.

Schedule 6 is in three parts. The first part is the straight forward 100 points proof of identity credentials. Checking the passport, birth certificate, drivers licence, medicare card, rate certificate etc.

As the Registrar correctly recognised, the 100 points standard is deficient unless the credentials are verified. This makes perfect sense to avoid identity fraud - either title fraud or mortgage fraud. Anyone can photoshop a drivers licence. Well not anyone but anyone with a crooked bent can. It now looks like the life of a conveyancer is not conveyancing but becoming a pseudo detective to catch the crook. The second and third parts of the identity check is to -

Part 2. keep a copy of the identity documents (although this could lead to breaches of personal privacy data if these documents were lost) and list the type of document, names, as in the extract published below

Part 3. detail the methods and sources of verification for Checks. In an exercise of futility I dutifully rang Vic Roads to ask how I would go about verifying a client's driver licence which equates to 40 out of 100 points. Kerry-anne of VicRoads was very helpful and liaised with her departmental manager and advised the following is required for any licence verfication check -

VicRoads has three requirements.

1. Consent from person in writing (privacy) for VicRoads to divulge information to lawyer / conveyancer
2. License Search Request: providing Name; Licence No; DOB; Address.
3. Search application fee of $7.80

Delivery methods

In person - done over the counter
By Mail - 5 working days (only 5 days!)

God help us if there were more than one individual registered on title.



So you see the conundrum. If we want to replace paper based conveyancing with electronic methods, we first have to abolish the duplicate title. If we abolish the duplicate, we have to replace it with a methodology of identification requirements. When you take a hard look at the issues of identity, you can come up with a system that has all the appropriate safeguards, but and the but is you can end up engineering a system that is worse than the current system we already have, know and works.

Caveats Online

Electronic Conveyancing: "Saving you time, money and effort". Well that's the official spin from ECV. For the moment that is hollow rhetoric. It might save your client the odd $20 on statutory fees. But it is questionable when it comes to saving time and effort. This is demonstrated by the process for lodging one of the simplest of instruments – a caveat

How much time did it take above the manual system when lodging caveats online? I estimate it took over 20 minutes of additional time (which would be better spent on hold trying to book a settlement with the banks). In the old fashioned manner of paper and print, a simple purchaser's caveat takes just a few minutes to print, sign and post. The electronic alternative takes over 20 minutes. The couple of caveats we lodged online each took well in excess of 20 minutes to complete. One took 26 minutes, the other about 25 minutes. With repetition, you might just get it under 20 minutes, but I don't think I will be persevering too much longer because of the time factor. Unless it saves you time, using the system will translate into higher costs to the client. Still, if the matter was one of urgency, I would lodge electronically, but not otherwise. The irony is to lodge a caveat online, first I printed out the caveat to assist me in completing the fields online. In addition, the process is simply bewildering.

Authenticating Paperwork

Schneier on Security
A blog covering security and security technology.

June 25, 2009
Authenticating Paperwork
It's a sad, horrific story. Homeowner returns to find his house demolished. The demolition company was hired legitimately but there was a mistake and it demolished the wrong house. The demolition company relied on GPS co-ordinates, but requiring street addresses isn't a solution. A typo in the address is just as likely, and it would have demolished the house just as quickly.

The problem is less how the demolishers knew which house to knock down, and more how they confirmed that knowledge. They trusted the paperwork, and the paperwork was wrong. Informality works when everybody knows everybody else. When merchants and customers know each other, government officials and citizens know each other, and people know their neighbours, people know what's going on. In that sort of milieu, if something goes wrong, people notice.

In our modern anonymous world, paperwork is how things get done. Traditionally, signatures, forms, and watermarks all made paperwork official. Forgeries were possible but difficult. Today, there's still paperwork, but for the most part it only exists until the information makes its way into a computer database. Meanwhile, modern technology -- computers, fax machines and desktop publishing software -- has made it easy to forge paperwork. Every case of identity theft has, at its core, a paperwork failure. Fake work orders, purchase orders, and other documents are used to steal computers, equipment, and stock. Occasionally, fake faxes result in people being sprung from prison. Fake boarding passes can get you through airport security. This month hackers officially changed the name of a Swedish man.

A reporter even changed the ownership of the Empire State Building. Sure, it was a stunt, but this is a growing form of crime. Someone pretends to be you -- preferably when you're away on holiday -- and sells your home to someone else, forging your name on the paperwork. You return to find someone else living in your house, someone who thinks he legitimately bought it. In some senses, this isn't new. Paperwork mistakes and fraud have happened ever since there was paperwork. And the problem hasn't been fixed yet for several reasons.

One, our sloppy systems generally work fine, and it's how we get things done with minimum hassle. Most people's houses don't get demolished and most people's names don't get maliciously changed. As common as identity theft is, it doesn't happen to most of us. These stories are news because they are so rare. And in many cases, it's cheaper to pay for the occasional blunder than ensure it never happens.
Two, sometimes the incentives aren't in place for paperwork to be properly authenticated. The people who demolished that family home were just trying to get a job done. The same is true for government officials processing title and name changes. Banks get paid when money is transferred from one account to another, not when they find a paperwork problem. We're all irritated by forms stamped 17 times, and other mysterious bureaucratic processes, but these are actually designed to detect problems.

And three, there's a psychological mismatch: it is easy to fake paperwork, yet for the most part we act as if it has magical properties of authenticity.
What's changed is scale. Fraud can be perpetrated against hundreds of thousands, automatically. Mistakes can affect that many people, too. What we need are laws that penalise people or companies -- criminally or civilly -- who make paperwork errors. This raises the cost of mistakes, making authenticating paperwork more attractive, which changes the incentives of those on the receiving end of the paperwork. And that will cause the market to devise technologies to verify the providence, accuracy, and integrity of information: telephone verification, addresses and GPS co-ordinates, cryptographic authentication, systems that double- and triple-check, and so on.
We can't reduce society's reliance on paperwork, and we can't eliminate errors based on it. But we can put economic incentives in place for people and companies to authenticate paperwork more.

This essay originally appeared in The Guardian.

Court win for apartment buyers leaves developers reeling

VICTORIANS buying houses and units off the plan have secured new legal rights to demand their money back, under a landmark ruling that has sparked fears of a collapse of projects across Melbourne.

In a setback for an industry already reeling from the credit crunch, the Supreme Court of Victoria has found that off-the-plan buyers can tear up their contracts and get their deposits back when projects are not completed on time.

The ruling came in a case involving two luxury apartment buyers in Geelong who won the right to have their deposits refunded and contracts revoked because the developer took several months longer to finish the project than agreed.

Until this ruling, it had been standard practice for developers to put clauses into off-the-plan contracts allowing for the extension of completion dates.

Reasons for late completion could have included labour strikes, planning approval delays, shortages of materials or labour and weather.

But in a ruling this month, Justice Bernard Bongiorno said such clauses were invalid because they put the risk of delay onto home buyers, leaving them with no way out.

The decision is an unwelcome one for an industry already faltering in the credit crunch, with more than $2 billion worth of Melbourne projects delayed or abandoned since September because of a lack of finance.

A leading property lawyer estimated the decision had put 10 per cent of Melbourne projects at greater risk of collapse.

One of those involved in the case, Jennifer Clifford, said developer Solid Investments had asked for three time extensions to complete her $2 million apartment overlooking Corio Bay. "None of it was the developer's fault," she said. "Things just kept going wrong. I mean there were objections and they struck an underground creek.

"(But) why should we as the prospective purchasers just have to keep hanging on for who knows how long?"

The Edgewater project, in which businessman Frank Costa paid a record Geelong price of more than $3 million for a penthouse, was completed in March.

Edgewater developer Murray Stone, who is appealing against the Supreme Court decision, said the ruling "opened a can of worms" for the industry. "Any contract that now goes over the sunset clause becomes void," Mr Stone said. "Even if buyers want to settle the contract they can't. They have to enter a new contract and not get the stamp duty savings."

He said it was difficult for developers to simply make sunset clauses longer, say five years, because banks would not normally lend beyond a 30-month completion date.

"All projects will now be under an enormous amount of pressure and the banks will probably not loan."

Freehills property partner David Sinn, whose firm was not involved in the case but advises many developers, said it set a precedent that had the industry worried about project collapse.

"Any current development where they have pre-sold apartments and are struggling to get finance is now at risk of buyers terminating their contracts and getting refunds," he said.

The Age Marika Dobbin
June 25, 2009

Clifford & Anor v Solid Investments Australia Pty Ltd

Date: 2 Jun 2009

Citation: [2009] VSC 223

Jurisdiction: Victorian Supreme Court

This case concerns a dispute as to whether the purchasers of two lots on a plan of subdivision have lawfully rescinded the contracts. The contracts were conditional upon registration of the plan of subdivision of the development, and conferred the right on the purchasers to avoid the contract if the plan was not registered by a certain date. The contract also provided for the date for registration to be extended by the vendor under the terms of the contract. The vendor gave notice of the extension of the date. The purchasers gave notice of rescission of the contracts, asserting that the contract term was ineffective to permit the extension under Sale of Land Act 1962 s9AE. The vendor refused to accept the notice of rescission. The Court considered (para 23) Everest Project Developments Pty Ltd v Mendoza and Ors which "held that the purpose and social policy underlying ss 9AA to 9AH of the Act was the protection of that section of the public which comprised purchasers of lots on unregistered plans of subdivision." In this instance, the Court said that the same reasoning applies to s9AE(2), which specifies that if the parties wish to stipulate a period other than the statutory period provided by that section, that other period must be specified in the contract itself. The Court ordered declarations that the contracts were lawfully rescinded by the purchasers. Link to Judgement

Commentary by Herbert Geer on Clifford case

E-conveyancing plan thrown a $2m lifeline

The Australian
Chris Merritt, Legal Affairs editor | June 19, 2009

THE push to establish a national electronic conveyancing system gained fresh impetus this week when the NSW government allocated $2 million to the project.

The extra funding, which was made available in the state budget, comes soon after NSW, Victoria and Queensland were given the leading roles in planning the national system on behalf of the Council of Australian Governments.

It also comes soon after Kevin Rudd was warned that the project was at risk of collapse because no funds had been allocated to establish the company that would run the system.

NSW Lands Minister Tony Kelly said his government had long been a supporter of a national e-conveyancing system and the extra $2m would help pay for its contractual and logistical expenses.

The extra funding has been allocated to the Lands Department, but if the company that will run the national e-conveyancing system is established before July next year, the $2m from NSW will be redirected to support the new entity, Mr Kelly said.

"A single national electronic conveyancing system would be a significant step towards creating a seamless national economy and NSW is working with Victoria and Queensland for it to be operational from 2010," Mr Kelly said.

He said an independent study by KPMG had indicated that the potential annual cost savings in NSW from a single national e-conveyancing system (NECS) would amount to $50m.

"Costs for the average conveyancing transaction are expected to fall by $170, providing both home buyers and sellers overdue cost relief," Mr Kelly said. "The process efficiencies available to industry as a result of NECS include less data entry and document preparation, settlement and lodgment savings, courier and bank cheque savings, and lower process administration costs generally."

The extra funding for the national system comes soon after the Victorian government was asked to hold an independent audit into why its state-based e-conveyancing system had cost an estimated $50m to build yet had been used for just one completed property settlement.

State opposition frontbencher David Davis called for the audit after telling parliament that the state government was continuing to spend about $6m a year on its e-conveyancing system, which is known as Electronic Conveyancing Victoria.

Consultants had made "tens of millions of dollars" from the project, but there had been no return for the Victorian community, Mr Davis said. "It seems a very expensive approach given the very small number of transactions that have been achieved with that system."

In the 18 months since the system had been available for use, it had been used for one transaction and had not been endorsed by key industry groups such as the Law Institute of Victoria and the Australian Bankers Association, he said.

Mr Davis said the national approach to e-conveyancing, which had been endorsed by COAG, seemed like a significant step forward because it would provide a low-cost approach.

He said there was "enormous resistance" from other states and the federal government to the idea of using the Victorian system as the proposed national system.

"ECV would have to be massively adapted and would not necessarily work in a simple way," he said. "But the key thing here is that ECV has seen massive expenditure by the state government and has been a massive opportunity for consultants, who have made tens of millions of dollars."

The Victorian government declined to answer questions from The Australian about whether ECV had in fact cost $50m, as alleged by the state opposition.

The government also declined to say whether it would allow the expenditure on ECV to be audited.

Innovation Minister Gavin Jennings, who is responsible for ECV, said in a statement that the government was continuing to work with state and federal governments and believed ECV "provides the basis for a national approach to electronic conveyancing".

His statement said ECV had "successfully processed over 600 transactions".

When asked through his spokesman if all but one of those transactions concerned the lodgment of documents rather than property settlements, Mr Davis declined to answer. He also declined to provide a breakdown showing the type of transactions that had been processed by ECV.

"Victoria is an active participant in the COAG process and is continuing to work with all jurisdictions and industry groups in the development of a national EC system," the statement said.

While Victoria is one of the three states with a key role on the national project, the state government has a significant financial commitment to its own state-based system, a government document shows.

The same document shows the financial plan underpinning the government's expenditure on ECV could be at risk unless most property transactions go through the state-based system.

A regulatory impact statement, dated July 2007, for new fees on land transfer says: "... the government has provided over $29.4m toward the development of the electronic conveyancing project".

Although that figure only covers expenditure up to July 2007, the regulatory impact statement shows the government was expecting to spend a further $49.5m on the project between 2007-08 and 2013-14.

The figures contained in the regulatory impact statement indicate ECV could cost the Victorian government $80m by 2013-14. The document shows also it had been planning to spend a significant amount of that money employing contractors and consultants.

It says the state government "has indicated that the full implementation and ongoing operational costs should be recovered from users of the services of Land Victoria".

But it warns that the amount of revenue generated by ECV will depend on how many transactions are processed using the system and it says the expected take-up rate for ECV is 26.5 per cent of all property dealings in 2009-10, rising 69.8 per cent in 2013-14.

The year in which expenditure on ECV would be greatest was expected to be 2008-09 when the system was expected to have cost Victorian taxpayers $9.7m, the regulatory impact statement says.

The year with the smallest government expenditure on ECV was expected to be 2012-13 when the system was tipped to cost $5.7m.

Over the seven years covered by the regulatory impact statement, the biggest single item of expenditure was expected to be "application development and support", which was predicted to cost the state government $18.5m over that period.

This includes the costs of developing and supporting the software that underpins the system and of a contract with what the document refers to as an "application development and support service provider".

Salaries for public servants and contractors working on the project were expected to be $18.1m over the same period. According to the document, 10 contractors were working on ECV in various roles.

"Major items comprise project management, business operations, user acceptance testers and the roll-out team that will train potential users and provide support," the regulatory impact statement says.

Rumour or Fact

AUSTRALIAN E-PROJECT ABANDONED
By Kelly Ng | 15 June 2009

FutureGov website

The Australian federal government has ignored a funding request and has withdrawn its involvement in a national online conveyancing system.

The National Electronic Conveyancing System (NECS) requires A$20 million (US$15.7 million) to establish itself and recruit executives. According to Les Taylor, Chair of the Steering Committee, industry participants – lawyers, bankers and conveyancers – will abandon the project if sufficient funding does not materialise.

The federal government allocated A$550 million (US$433 million) to the Council of Australian Governments (COAG) to reform and harmonise regulation across states. Some of this money was meant to fund the e-conveyancing project. However, of the A$100 million that will be paid out this year, none has been earmarked for this project, said Taylor.

NECS, was started in 2005 was supposed to be completed by next March, will allow practitioners to electronically transfer property ownership and make payment online. It is expected to reduce costs of buying and selling property by A$250 million annually because consumers will pay less legal and conveyancing fees.

The federal Government cuts link to ailing e-scheme

Chris Merritt, Legal affairs editor | June 05, 2009
Article from: The Australian

THE federal Government severed one of its last links with the moves to establish a national electronic conveyancing system last week after being informed that the scheme was on the brink of collapse.

The decision to reduce the Government's involvement was taken last Friday by an inter-governmental committee that reports to Finance Minister Lindsay Tanner and Small Business Minister Craig Emerson.

That group, the business regulation and competition working group, decided to hand responsibility for the planned system to the governments of Victoria, NSW and Queensland.

The decision came a week after Kevin Rudd was warned that the project was at risk of "complete failure".

This warning was contained in a letter to the Prime Minister from Les Taylor, a former general counsel at the Commonwealth Bank, who heads the steering committee that has been planning the national e-conveyancing system since 2005.

Mr Taylor told Mr Rudd that unless $20million in repayable seed funding could be found to establish the company that would run the new system, lawyers, bankers and conveyancers were likely to abandon the project.

While the commonwealth has promised the states $550million if they undertake a series of micro-economic reforms, including e-conveyancing, no funds have been earmarked for the project.

Friday's decision to shift responsibility for the scheme to Victoria, NSW and Queensland was taken by government officials at a meeting that was not attended by ministers.

One of those familiar with the meeting said it was normal for responsibility for major national projects to be divided between the states.

However, Opposition legal affairs spokesman George Brandis urged the Government to take back the lead role on the project and end years of bickering between the states that have alienated the private-sector players in conveyancing. "It has been a shambles for more than a year now and the Attorney-General has shown a complete lack of leadership in trying to resolve the problem," Senator Brandis said.

"There is a very significant risk that because of the delay and lack of leadership from the commonwealth in particular, that this whole project might fall over.

"The optimal result of a seamless national system is going to be lost and we may well end up with a set of arrangements that are no better than the current arrangements."

He said the problems with e-conveyancing went much deeper than the lack of funding to establish the new system.

"The various participants cannot even agree on a model that they are prepared to work towards," Senator Brandis said.

"Until the state governments are able to reach agreement on that threshold question, there is no point in talking about funding for the system."

He said the lack of agreement between the states appeared to be associated with the fact that the Victorian Government had continued to develop a state-based e-conveyancing system while industry and other state governments wanted a national one.

Last October, it was revealed in The Australian that the Victorian Government was continuing to develop its system -- less than four months after Mr Rudd had announced that all states would be using a national e-conveyancing system by March 2010.

In a joint statement with Mr Tanner, Mr Rudd said last July industry groups had estimated that "a national electronic conveyancing system could reduce the costs of buying and selling property by $250million a year".

"Consumers will save money by spending less on expensive legal and conveyancing fees," the joint statement said.

They said the agreement to establish a national system "is only possible because all states and territories have agreed to co-operate".

The delayed start date of late 2011 will deprive house buyers and sellers of cost savings that on the estimates used by Mr Rudd and Mr Tanner are worth about $437million.

The later start date was put in place after all state governments failed last year to meet a series of deadlines for seven key decisions on establishing the new system that had all been listed in the July statement by Mr Rudd and Mr Tanner.

At the same time, the Victorian Government continued to develop its state-based system, which would be at risk had the states reached agreement on the matters listed in the July statement.

The deadlines that the states missed had been set after e-conveyancing was placed on the agenda of the Council of Australian Governments following a summit in February last year of the key industry groups.

That meeting was chaired by one of the most senior officials in the federal Attorney-General's department, Richard Glenn.

Mr Tanner and Mr Emerson were then given responsibility for a working group of officials that was to prepare options for the structure of the system.

But in March, it emerged that the federal and state governments had agreed to delay the new system and responsibility for the project had moved back to the states.

Senator Brandis said the hiatus over the national e-conveyancing system could be resolved if Mr McClelland ensured the project was given priority by the standing committee of attorneys-general.

Land Victoria - Request for an audit

Land Victoria: electronic conveyancing

Mr D. DAVIS (Southern Metropolitan) -- My adjournment matter is for the attention of the Minister for Environment and Climate Change, who is responsible for the Land Victoria section of the Department of Sustainability and Environment. It concerns in particular Electronic Conveyancing Victoria, known as ECV, an electronic conveyancing system that seeks to replace paper transactions with electronic conveyancing. The Victorian government has expended a significant amount of money -- $50 million on recent estimates and more than $40 million 18 months ago -- and is continuing to spend around $6 million a year on the ECV project. The national approach that was endorsed by the Council of Australian Governments about a year ago was a significant step forward, because it would have provided a low-cost approach to conveyancing transactions around the country. Unfortunately Electronic Conveyancing Victoria, despite expenditure of more than $50 million, has only had one transaction in the 18 months it has been in operation. It seems a very expensive approach, given the very small number of transactions that have been achieved with that system. I am very aware that the Australian Bankers Association, the Law Institute of Victoria and other key groups, like the conveyancers, have not endorsed ECV and the electronic conveyancing approach in Victoria. What I now seek from the Minister for Environment and Climate Change, after the expenditure of at least $50 million of public money for a single completed conveyancing transaction, is an audit. I seek that he order a clear external audit that would achieve an understanding of how this money has been wasted and how the government proposes to put this into the national scheme. There is still enormous resistance from the other states and the national government to the simple approach of putting ECV in as the national system. ECV would have to be massively adapted and would not necessarily work in a simple way, but the key thing here is that Electronic Conveyancing Victoria has seen massive expenditure by the state government and has been a massive opportunity for consultants, who have made tens of millions of dollars with no return to the Victorian community, so I ask the Victorian environment minister to immediately launch an audit.

Hansard. Upper House. 3 June 09

Westpac sorry for security 'stuff-up'

FULL DISCLOSURE / MARK HAWTHORNE / THE AGE
June 4, 2009

A SECURITY breach has allowed confidential Westpac shareholder information to be included in an official document published on the Australian Securities Exchange website.

A document Westpac released to the ASX in March contains the security holder reference numbers (SRN) and holder identification numbers (HIN) of up to 20 different accounts controlled by global investment bank JPMorgan and retired 65-year-old shareholder Peter Liddle, who resides in the Northern Territory. Such details could be used by share "bottom feeders" such as David Tweed to gain control of the shareholdings.

The addresses and account details of JPMorgan Nominees and Mr Liddle are hidden in white type in the PDF document, which was issued by Westpac company secretary Anna Sandham on March 13.

The details cannot be read — but if the words are highlighted and copied into another document, such as an email, they can be converted into black type.

Several business websites, such as wotnews.com.au, converted the PDF document into text, and in doing so published the SRNs and account details on the internet.

The letter was sent to holders of St George Bank shares and hybrid securities, offering the chance to convert them into new Westpac securities. The two banks merged last year.

A spokeswoman for JPMorgan said she was "astonished" to learn Westpac was responsible for the security breach, but assured the bank's institutional customers that their shares were safe. "These are nominee accounts and no transfer of the shares can be done without the approval of the actual account holder," said Claire Linton-Evans.

Such safeguards are not in place for retail shareholders such as Mr Liddle, who only discovered his account details were public knowledge when BusinessDay contacted him.

"I'm absolutely horrified to find that all of my personal account details can be read on the internet," Mr Liddle said. "I've already had that Tweed bloke trying to get his hands on my wife's Woolies shares once this year, and my SRN is on the internet. It's my 65th birthday today, and now I have to sort out this mess."

Westpac spokesman David Lording admitted that a "stuff-up" had led to the release of the information. "It was our mistake, it was our fault, and we have already apologised to the people affected," Mr Lording said. "We contacted them today and apologised, and will be implementing new procedures to ensure it doesn't happen again."

Mr Lording said he was aware the information had "originated" in an official release from the bank to the ASX. "Somehow the information was in that document. It was an inadvertent mistake, not a deliberate one, and we apologise to the shareholders affected."

I'm late for a settlement

Conveyancing drift

The Australian 29 may 09

THE late newspaperman Paddy McGuinness frequently advised reporters to "follow the money" in order to arrive at the root of any particular problem.

If that dictum is applied to the problems of building a national electronic conveyancing system, it is hard to avoid the trail of money laid down by the Government of Victoria.

If a national electronic conveyancing system is established, the Victorian Government will need to admit that much of the money it has spent on its state-based electronic conveyancing system has been wasted.

A national system -- by definition -- would operate in every state. And that would consequently render the Victorian system superfluous. Politically, that would be a catastrophe for the state Labor Government.

The state Opposition estimates that the Government has shelled out about $50 million on its e-conveyancing system.

Yet that potential embarrassment would disappear if the national system were somehow stymied.

Every year that a national system is delayed is another year in which buyers and sellers of houses are being deprived of cost savings that have been estimated to be worth $250 million.

Those benefits, however, are spread among a diffuse group of people in other states who might not be aware of what they have lost.

E-conveyancing edges closer to total collapse

Chris Merritt | May 29, 2009 The Australian

THE push to roll out a national electronic conveyancing system is close to collapse because the nation's governments have not allocated $20 million to establish a company to run the new system.

Kevin Rudd was warned this week that without repayable seed funding for the new company, the national e-conveyancing project is at risk of "complete failure".

The Prime Minister received this warning in a letter from Les Taylor, who chairs the steering committee that has been planning the new system.

Even though the Council of Australian Governments has agreed that the states should establish a single national e-conveyancing system, Mr Taylor wrote that the savings from the project were at risk of being lost for at least a generation.

Those savings have been estimated by industry groups to be worth $250 million annually.

"I have to tell you that the real prospect that you and your COAG colleagues are facing is the complete failure of this important micro-economic reform project," Mr Taylor wrote.

A former general counsel of the Commonwealth Bank, Mr Taylor said lawyers, bankers and conveyancers were likely to abandon the project unless $20 million was provided to establish the company that will run the system.

The project could be saved "by a modest injection of seed funding by the Commonwealth", Mr Taylor wrote.

Mr Rudd's office told The Australian the federal Government had already provided significant funding through COAG in exchange for the states and territories agreeing to set up the new system.

A spokeswoman for Mr Rudd said the Government was committed to providing $550 million to the states and territories as part of COAG's "seamless economy national partnership agreement".

"In exchange, the states and territories agreed to reform and harmonise regulation across 27 regulatory hotspots, including the creation of a national electronic conveyancing system by the end of 2011," the spokeswoman said. "This includes an upfront facilitation payment in 2008-09 of $100 million, to be shared between the states on a per capita basis."

Mr Taylor's letter to the Prime Minister is the result of concern among the private sector groups involved in conveyancing that none of the money flowing to the states under the COAG agreement has been earmarked for the e-conveyancing project. Because the e-conveyancing company is not due to be established until September next year, it will be too late to have access to the Government's $100 million facilitation payment that will be made this financial year.

And while the COAG agreement provides a strong financial incentive for the states to make progress on 10 priority areas listed in the agreement, those priority areas do not include e-conveyancing.

If the states fail to meet their commitment to establish the project, they could still receive their full reward payments from the commonwealth so long as they make progress in the other areas covered by the agreement. Concerns have also emerged that the problems associated with the national system could be associated with Victoria's growing commitment to a separate state-based e-conveyancing system.

Victorian Opposition frontbencher David Davis said he believed the state Government had now spent about $50 million on its state-based system, which is known as ECV.

"It's a tragedy that a genuine national system has been spiked by the activities of the Victorian Government in preference for their $50 million white elephant," Mr Davis said.

COAG's endorsement of a single national system raised doubts about the future of ECV because the national system would operate in each state.

While ECV has been open for business for about 18 months, it has been boycotted by solicitors because of concerns by their professional indemnity insurer that it could expose lawyers to increased potential liability.

The major banks have refused to use ECV because they do not wish to encourage the development of state-based systems that would diminish the efficiency gains from e-conveyancing. 

All the private sector players in conveyancing are concerned that COAG's decision to delay the establishment of the national system means years of preparatory work by the steering committee is in danger of being lost. 

By delaying the start date for the project from March next year until the end of 2011, COAG has already wiped out cost savings for home buyers that, based on industry estimates, are worth about $437 million. 

Mr Taylor's letter to Mr Rudd says private sector groups involved in conveyancing had made it clear to the steering committee at its last meeting that without a clear funding commitment, they did not believe their organisations would continue to support the project. 

These groups include the Law Council of Australia, the Australian Institute of Conveyancers and the Australian Bankers Association. 

The steering committee, which also includes representatives of state and federal governments, has been working towards establishing a national e-conveyancing system since 2005. 

While its work has been hampered by disagreements between the state governments, Mr Taylor told Mr Rudd that many key requirements were well advanced. 

"Unfortunately the point has now been reached where unless a firm commitment to provide the funds necessary to establish the corporation and to attract capable and skilled directors and executives is forthcoming, then I have to tell you that it is my considered opinion that the industry participants in the project will be highly unlikely to be able to continue their support of the project," Mr Taylor wrote. 

"The fact is that if the banks and legal practitioners, in particular, walk away, the project will fail and the considerable value and progress created by the committee's work to date will be lost. 

"If this is allowed to happen, then the prospect of electronic conveyancing delivering financial benefits to Australians, particularly greater housing affordability for young people will be lost for at least a generation," Mr Taylor wrote. 

The Australian Bankers Association said the uncertainty over the capital base for the national system was a great concern. 

"You cannot expect private sector organisations like banks to stand idly by and do very little while the states have gone back to their people to discuss funding," said ABA director of retail regulatory policy Ian Gilbert. 

"Each bank will have to make its own decision but it's totally unrealistic to expect that people will be kept on hold, on ice, while the jurisdictions sort out questions of funding. 

"This is not the way that the private sector would go about it. It would all be up front, organised and settled," Mr Gilbert said. 

Law Council of Australian president John Corcoran said the legal profession was extremely disappointed by COAG's decision to delay the start date for e-conveyancing. 

"It really took us back to square one," Mr Corcoran said. 

Westpac backflip on India jobs shift

WESTPAC has dispatched a strike team to India as part of an offshoring reconnaissance mission a week after the bank's chief, Gail Kelly, drew widespread praise for suspending the practice of sending jobs overseas.

The Australian understands the bank's top technology executives have travelled around India over the past two weeks to meet with about eight outsourcing companies.

Two outsourcers will be selected to perform a range of work and are set to benefit as Westpac spends hundreds of millions of dollars over the next couple of years to update core banking systems and integrate complex technology functions as part of the $12 billion acquisition of St George bank.

Several sources confirmed the Westpac contingent met with technology firms Accenture, IBM, EDS, Wipro Technologies, Tata Consultancy Services and Infosys, as well as one or two others.

A fortnight ago Ms Kelly announced she had put the brakes on Westpac's offshoring of Australian-based jobs, a decision prompted by the recession and expectations that unemployment could rise next year to 8.5 per cent.

"I've decided to suspend further offshoring until conditions improve," she said.

Westpac declined to comment on the visit to India or the bank's future offshoring plans.

Ms Kelly's commitment to keep jobs in Australia followed a three-year undertaking by Commonwealth Bank chief executive Ralph Norris not to send jobs offshore.

Westpac's stance also drew praise from Finance Sector Union national secretary Leon Carter who said the bank had sent 460 back-office jobs overseas, mainly to India, and was probably considering a similar fate for "1000 or more" other positions.

"This is an excellent outcome because maintaining jobs in Australia is of paramount importance," Mr Carter said at the time.

It is believed Westpac plans to set up a two-vendor panel which can be called on when necessary to perform a range of work.

The prospective outsourcing vendors were not provided a specific brief by Westpac but were asked to pitch for where they could offer technology services to the bank.

It is not clear whether there are plans to set up a "captive" outsourcing centre similar to ANZ's Bangalore facility which houses more than 3000 staff.

The winners will benefit from the merger of St George and Westpac, which is slated to cost $700 million when completed, with half of the spend expected to cover the integration of the banks' technology systems.

It is believed the outsourcers panel could be drawn on to complete the lion's share of this work as well as lucrative work to update Westpac and St George's core banking systems.

St George has already outsourced the support and maintenance of key legacy systems to Indian firm Infosys.

There has been a surge in local technology work over the past year, spurred by several legacy system overhauls and consolidation across the financial services industry.

An industry source said banks had been forced to look for resources overseas because of the limited technology talent pool in Australia.

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Mahesh Sharma | May 18, 2009 | The Australian

30 minutes to lodge a caveat

Electronic Conveyancing (EC), the first online caveat has been processed in Victoria by EC Subscriber and National President of the Australian Institute of Conveyancers (AIC), Pauline Barrow.

Pauline said EC was a “convenient and efficient online service (which) has resulted in the preparation, lodgement and registration of a caveat within 30 minutes.”

Source EC News 13 May 2009

LIXI - major focus on NECS

LIXI continues to contribute to the development of the National Electronic Conveyancing System (NECS). The work currently under way will ensure that the data transactions are designed well in advance of the roll out of NECS and conform to the requirements of LIXI members. NECS is proceeding rapidly with requirements development and has encouraged LIXI to be proactive with the requirements for the data standards. All members are encouraged to participate in the requirements gathering process. The NECS transaction standards are a major deliverable for LIXI over the next 18 months – on the scale of the original credit application language – and is a key focus for us this year.

May 09 LIXI newsletter - Erik Fenna CEO - introduction

ANZ moves to Bangalor India

[ email message ]

Unfortunately this is where the issue lies, our settlement prep dept is in Bangalor India, this is why they do not guarantee the 10 day turn around time, but will try to get this done within that timeframel, I will keep on their backs.

 

I will get approx 3 days notification therefore it should give you ample time to book in settlement,

 

Thanks Bruce and apologies for the delay,

 

(name withheld)

Business Banking Manager 
Australian & New Zealand Banking Group Limited 

Identity and the Land Registry

For the past 150 years, Land Registries^ have not conducted or insisted on identity checks in respect to the Register. How many titles are registered in false names? How many titles are registered in names where the proprietor is long dead. No one knows. And how does it matter? 

With anti-money laundering legislation and the advent of electronic conveyancing , identity has become a front and centre issue. Especially with the likelihood of the elimination of the duplicate certificate of title, the right to deal with the land is the central issue.

Today's rules are quite simple

1. The right to deal with the land is you can produce the duplicate certificate of title
   
2. The right to be registered on title is premised on production of the duplicate certificate of title and a transfer of land executed by the registered proprietor
   

Under an electronic conveyancing regime, the first premise is the duplicate certificate of title will not exist. (If this is not to be the case, what's the point to all this?) Legislation will have to be passed, which states, "upon this date the duplicate certificate of title will no longer be required to convey title" or words to that effect. The right to deal with land will solely be adduced by the entry on the Register. 

The rules under an electronic conveyancing regime

1. The right to deal with the land is you can prove you are the person who is registered on the Register; and
   
2. The right to be registered on the Register is an electronic transfer executed by the person, or his agent, who is registered on the Register
   

The right to deal with the Land

A vendor or borrower will no longer have to produce the duplicate certificate of title.

The right to deal with the land might be a combination

• Security number issued to the registered proprietor 
• as is the current practice with shares, a Shareholder Reference Number (SRN)
  
• administratively, the SRN is sent to the address shown on the Register
• the SRN is not publicly searchable
• Proof of Identification
  
• What standards will be set?
  
• Who is qualified to carry out the test?

Proof of Identification (POI) 

What standards will be set?

FTRA (or 100-point) Standard

It is widely acknowledged the FTRA (or 100-point) Standard is an inadequate standard.

NECS and the Land Registries agree on this point.

The FTRA (or 100-point) Standard, although widely known and used, is more than 20 years old. It was devised before the development of desktop publishing and the wide availability of inexpensive, high-quality colour printing. It is generally considered to be from an era when identity fraud was much less of a problem generally and to Land Registries than it is today. While still a useful general-purpose standard, it is considered by Land Registries to be insufficiently rigorous for deterring fraud in land title transactions.

Unless the client is known to the conveyancer, production of identity documents does not cut it. Especially in an age where every student, from the age of 15, for the past 10 years or more has been dealing in false IDs.  How hard is it, or how easy is it, to produce false identity documents. Google "false ID" and GET YOUR FAKE ID HERE! screams out in capital letters. Scan, photoshop, print and laminate.

The FTRA standard is simply inadequate for an electronic conveyancing regime. 

**The Gold Standard

The Gold Standard recently developed by the Commonwealth Government as part of its National Identity Security Strategy (NISS) goes at least one step forward in solving the POI issue. And that is adding verification. A key principle of the Gold Standard is POI credentials and other information provided by the applicant should be verified with the relevant issuing authority or other authoritative source.

Which raises the question what are the procedures for document verification? Which also begs the question that at present, there are no systems which allows conveyancers to verify clients' credentials. In fact a conveyancer calling any government agency to verify a client's credentials will be met with a barrier of privacy concerns.

Which also raises the question are lawyers and conveyancers qualified to identify clients? Not beyond asking for  a copy of drivers licence or other identification.

The Gold Standard envisages enrolling agencies would enrol a person to a a Gold Standard (only once). This individual becomes a known customer. As a result, once an individual has been enrolled, this could be used to streamline enrolments with other agencies (ie Land Registries and applied to land registry transactions).

Who is qualified to carry out the test?

From the above analysis, It is clear that lawyers and conveyancers are not qualified to carry out POI tests, beyond attesting to knowing long standing clients.

It cannot be left to lawyers and conveyancers to carry the responsibility and liability for identity checks (at least not along the lines of the present FTRA 100 point standard)

Government and the Land Registries need to implement as part of its EC system a point of entry for lawyers and conveyancers to conduct verification checks^^ on credentials presented to them. 

Ipso facto, Land Registries are therefore hamstrung until government itself implements the essential elements of the NISS which covers verification checks, being what I believe is the minimum standard for electronic registration systems. 

Is there an alternative?

The government is concerned about the least possible call upon Torrens Assurance Funds for compensation in the event of registration fraud.*  I would suggest that in the absence of a system that permits lawyers and conveyancers to simply carry out verification checks (as iterated in Principle 7 of the NISS), the government will need to extend the Torrens Assurance Fund to cover and indemnify for losses due to identity fraud.

** NISS Gold Standard Paper 

Brett Hayton - 247legal

---

* The principles of Client Identity Verification are collectively intended to provide:

• users of NECS with confidence in the authenticity of the transacting parties they are dealing with
  
• transacting parties with confidence in the use of NECS by their representatives
  
• the community with confidence in the integrity of the land title registers
  
• the least possible call upon Torrens Assurance Funds for compensation in the event of registration fraud.
  

Source NECS paper

^ Exception - Lands NSW now has an identity check using the FTRA 100 point standard

cf. SA - The instrument must be witnessed by a person who either knows the executing party personally or is satisfied as to her or his identity.

Qld - A mortgagee intending to take a mortgage over freehold land as security for a debt or liability, must, prior to lodging a mortgage instrument for registration, take ‘reasonable steps’ to ensure that the person who executed the instrument as mortgagor is identical with the person who is, or who is about to become, the registered proprietor of the lot or the interest in the lot. Under the Land Title Act 1994, a mortgagee takes ‘reasonable steps’ if they comply with the practices included in this Manual. In essence, these practices reflect the ‘100 points of identification’ provisions under Commonwealth legislation governing certain financial transactions, namely, the Financial Transaction Reports Act 1988 (FTRA) and the Financial Transaction Reports Regulations 1990 (FTRR).

NECS National Project Team 

Client Identity Verification (CIV) Standard – a purpose built standard should be developed based on current practices in financial institutions under the Anti-Money Laundering legislation (March 2009)

^^ Identity Security and the National Document Verification Service

Impersonation - an article by bruce schneier

Lending Landscape in Australia post GFC

Compared to the pre GFC era, there is very little competition for lending in Australia. After mergers and acquisitions by the Big 4 their market shares stands around 90%

1. CBA (BankWest)
   
2. ANZ
   
3. NAB
   
4. Westpac (St George & RAMS)
   

Thereafter, the alternatives stand as

• Bendigo / Adelaide Bank
  
• BEAT
  
• heritage building society
  
• ING
  
• Homeloans Ltd
  
• AMP
  
• IMB
  

As the big banks get bigger, perhaps the differentiater for clients is service. Service by brokers and service by the lender pre and post settlement. 

Convert your fax into a scanner

Elecronic conveyancing doesn’t have a fixed definition.

NECS decribes it as an efficient and convenient way of completing property based transactions and lodging land title dealings for registration. In others word conducting a financial settlement electronically and registering land registry instruments electronically rather than with paper forms lodged over the counter.

247Legal has attempted to define electronic conveyancing - the system of exchanging sales & mortgage documentation and property data electronically between vendor & buyer, agent & lawyer, brokers & banks, government & land registry from point of sale to contract to settlement without (or with minimal) printed documentation.

Or perhaps electronic conveyancing can be as simple as being able to exchange documents electronically.

To be able to exchange documents electronically, by email for example, you have to be able to convert a paper document into an electronic document. The most common method is to use a scanner and the most common format is a PDF.

For the past 30 years, the fax has been the most common method for exchanging documents. If it has not yet happened, soon scanned to email documents will overtake the fax, which is common sense. But fax technology continues to dominate the industry, particularly with the 4 major banks. This is despite headlines for example that the approval times blow out at one major bank because its fax machines are being clogged (Herald Sun March 10, 2009). The banks' back office operations must be drowning in faxes, as testimony by the conveyancing industry provides in legions of stories of lost faxes.

 

 

Fax technology is redundant. Or it should be

If your office still does not own or use a scanner, 247Legal has done some bench testing on scanners and scanning options that might help you to cross over.

The bench test is a 15 page contract of sale using an enterprise and desktop scanner as well as a fax to email service. The scan test was timed from placing the document into the scanner or the fax

Toshiba Estudio 4511	37 seconds	$14,315
Fujitsu duplex fi-4120C	1 minute 55 seconds	$1,400
Mbox fax to email	57 seconds** being the time spent to send the fax ** the Brother MFC fax scans to memory, then sends and it may be several minutes before you receive the email with PDF attachment	$10 per month plus cost of local call

The Toshiba I would describe as the mothership won hands down. But for the price of a small car, you want to be pumping out volume. But then again this is a true multi function device, for a fully networked print, copy, scan solution.

The Fujistu is a great compact desktop scanner capable of scanning duplex. Having used this model for several years, the author can attest to its usefulness and reliability. The current model is the 6120, is faster than the 4120 and comes bundled with a full version of Adobe Acrobat which is a significant cost saving in itself.

If you are not ready to make the investment in a scanner of your own, there is an alternative that can transform your existing fax machine into a scanner. By subscribing to a fax to email service likembox.com.au, any business can convert their current fax machine to a scanner. Take any document, feed it into your fax, dial your mbox fax number, and voila a minute or two later, the sent fax will be back in your inbox as a "scanned" PDF. And the bonus is, because mbox is a fax to email service, all your inbound faxes can be delivered to you as email as well. Mbox provides an effective low cost alternative to buying a dedicated scanner. Its not quite retiring the fax, but its giving it a new lease of life. The basic mbox service costs $9.95 per month

Conveyancers and lawyers are in the paper business. Today, the scanner is a basic tool of trade. If you are not ready to buy, consider subscribing to a fax to email service to gain the benefits of the paper saving. Or if you can buy, buy the best your can afford. It will pay for itself many times over and it is part of the matrix that we call electronic conveyancing.

eDischarges: First element of eConveyancing in Ireland

The Property Registration Authority (PRA) in partnership with the Law Society andIrish Mortgage Council has developed a new online system which will enable lending institutions to request the cancellation of registered charges by electronic means without the need to submit any paper to the PRA. The new system – known as eDischarges - will be more secure, efficient and transparent than the existing process and will eliminate many of the inefficiencies and delays currently experienced when mortgages have been redeemed.

Catherine Treacy, Chief Executive of the PRA said “The launch of this new system for processing discharges of charges in a completely paperless environment is public validation of a significant amount of work undertaken over the past two years.  While planning and development work has been ongoing for several years this is the first public step on a journey that will ultimately lead to a complete system of electronic conveyancing in Ireland.  All of the parties, particularly the staff in the PRA who have worked on the development of this system, can take great pride in their achievement.  The PRA would like to place on record its sincere thanks for the contribution made by the Law Society and Irish Mortgage Council and our colleagues in the Revenue Commissioners and Companies Registration Office, to the successful delivery of the new eDischarges system.”

The development of an eDischarges capability by the PRA is central to the development of a national system of electronic registration of title (eRegistration). The launch of eDischarges will also mark the delivery of the first element of eConveyancing in Ireland.

Gabriel Brennan, Law Society eConveyancing Project Manager said “The Law Society is delighted to be involved in this exciting initiative and thanks the PRA staff and Irish Banking Federation (IBF)for working so closely with the legal profession on the design of this new system. As a result of this collaboration inefficiencies and delays in the release of registered charges will be eliminated. Also in conjunction with this project the Law Society and IBF have initiated a new streamlined procedure for requesting title deeds, redemption figures and discharge of a charge. Together these two initiatives represent significant reform of the conveyancing process. There remains, however, considerable work to be done to reach the ultimate goal of eConveyancing and the Law Society looks forward to building on this progress with the PRA and IBF in the coming years.” 

Three lending institutions - Permanent TSB, AIB and KBC Bank - will launch the live system on the 30th March 2009 and, two weeks later on the 14th April, the system will be available to all lenders.

Pat Farrell, Chief Executive of IBF said “There was great appreciation amongst IBF members for the constructive nature of the working relationship with both the PRA and the Law Society.  This dialogue has led to the first tangible milestone on the road towards a fully functioning eConveyancing system in Ireland. IBF welcomes the move towards a modern, paperless and streamlined conveyancing system. Ultimately, eConveyancing throughthe introduction of a technology driven process will benefit Irish consumers and other stakeholders in the form of enhanced consistency, transparency and reduction in time and costs. In the meantime, IBF looks forward to continued engagement with the PRA and Law Society to achieve further improvements to the conveyancing process.” 

Source  Sarah Long in Changes in land registry practice and procedure in other countries