Journal of Law, Information and Science
E-Conveyancing in Australia: An Important Step Along the Journey to E-government
This article has two broad objectives. First, it reports on progress towards achieving the Australian National Electronic Conveyancing System (NECS). Secondly, the article analyses the significance of the NECS in the general context of e-Government. The NECS project was established by Australian state and territory governments in 2005 and significant progress has been made over the past five years. When the NECS is completed, conveyancers, legal practitioners, financial institutions, mortgage processors and other players involved in conveyancing will be able to access the NECS online with an electronic workspace provided for each property transaction. The system will allow users to provide, secure, certify and sign documentation. Digital Signature Certificates (DSCs) will ensure authentication and prevent repudiation and various risk mitigation and fraud prevention measures will be taken. Financial settlement will occur through the Reserve Bank’s Information and Transfer System (RITS) and the State and Territory Revenue Offices will receive duty and tax payments electronically. Consumers will be able to track the progress of their transaction via limited Internet access to the NECS. Financial institutions will be able to integrate their services and mortgage documentation systems with the NEC system. Collectively, the NECS is an excellent example of the substantive and procedural challenges involved in making e-government a reality.
Key words-e-conveyancing, e-government, digital signature risk management
This article reports on progress towards achieving the National Electronic Conveyancing system (NECS) and analyses its significance in the general context of e-government. The NECS is one of the most significant e-government projects ever undertaken and places Australia among the leaders in this area, including such other jurisdictions as the UK Ireland and the Netherlands. The NECS was created by Australian state and territory governments in 2005 and significant progress has been made over the past five years. Collectively, the NECS provides an excellent example of the role of law as a design and governing framework that utilises a set of rules, protocols, assurances and other systems features to create a much-improved system of conveyancing. Moreover, the lessons learned in the development and successful implementation of the NECS system provides a useful model for future e-government development that will assist the Australian government to achieve its strategic goals in developing a modern economy and remaining among the country leaders in e-government.
Property conveyancing and mortgage financing system and its procedures are of major importance to the regions of Australia. The regulation of real estate in Australia is largely state-based. Real estate transactions are document intensive and complex. A typical transaction includes the drafting, examination and exchange of a contract of sale. There are building and pest inspections, draft contracts, vendor certificates, requisitions, and so on. Typically, the parties to a real estate sale also must arrange finance, pay a deposit, pay stamp duties, and work out adjustments for water rates, electricity and other such obligations. Parties will typically formalise financing in the form of a mortgage agreement and check to see whether there are any other registered interests. In this process of conveyancing, each jurisdiction differs in its legislative framework, procedures, powers of the registrar, the nature of the conveyancing profession and more.
In the past, deposit-taking banks were the major source of loan funds for the purchase of real estate. With the deregulation of the bank sector in 1985, the securitisation of mortgages from 1994, and growth of a global market in such financial instruments, the real estate mortgage market became increasingly international. This meant that an industry that was predominantly local had in a short period of time become national and international. For example, the major share of finance approvals for non-bank mortgage originators grew from 11% in 1994–95 to 18% in 2001. In 2004, approx half of all mortgage-backed securities were issued in US dollars or Euros and Australia had one of the largest mortgage-backed security markets in the world with new capital raisings of over $20 billion annually. Mortgage re-financing activity has also grown substantially with 40% of all mortgage approvals for investment purposes.
Increased competition has also meant pressures to use cost-reducing outsourcing arrangements. The movement to the NECS has thus occurred in a fluid environment. Moreover, the legal environment continues to change and take on an increasingly national and international outlook, evidenced by the passage of many laws that impact commercial dealings, including the Competition and Consumer Act 2010 (Cth), national consumer credit legislation and significant and ongoing regulatory reforms in the financial sector following the Global Financial Crisis.
For international readers outside Australia and others unfamiliar with Australian property law, land ownership in Australia is generally under Torrens title which was introduced into Australia in 1858 and since enacted in every Australian jurisdiction. In addition, there is old systems title which relates to land rights created prior to the introduction of the Torrens system, as well as native title, which relates to customary laws of Australia’s Indigenous peoples. Each state and territory in Australia has its own legislation governing real property as well as its own administrative bureaucracy and rules governing the recording, protection, and transfer of interests in land. The Torrens system is based on the registration of the land as opposed to tracking the history of the land through the transactions of people. The advantage of a Torrens system is that it provides a simpler and more accurate record of interests in a particular piece of land than do deeds and other instruments used in the old system which was previously dominant. Under the Torrens system, title is determined by the register and a certificate of title that accurately and completely reflects the legal interests in the land. The certificate of title is proof of ownership and the effect of registration is to remove uncertainties by giving priority and validity to what is stated in the register and mirrored on the title certificate. Under a Torrens system it is not necessary to conduct a title search of the history of dealings in that property. Subject to exceptions (eg statutory fraud and equities between another person and the person registering the property) the person who acquires an interest in land under the Torrens system gets the land free from equities, trusts, and other unregistered interests. However, an unregistered interest in land may be protected by registration of the interest, lodging a caveat on the land register or providing notice of the unregistered interest. Another important aspect of Torrens title is an insurance system that provides that a person who is deprived of land as a result of the operation of the Torrens system of registration and certification may claim compensation from the government.
E-conveyancing is also an important step in Australia’s general move toward e-government. Australia is recognised as one of the leading countries in the move to an information economy and the Australian Government has played a pivotal role in this transformation. Although governments differ in the pace and nature of reforms required to bring about the transformation to e-government, many of the underlying issues are the same for most governments.
The focus on the role of government in the move to an information economy is warranted for several reasons. First, it is incumbent upon governments to provide the necessary infrastructure to promote a knowledge economy. This infrastructure includes the adoption of laws that enable and promote the adoption by public and private sector organisations of new technologies as we move toward an ‘Information Age’.
Secondly, one of the most powerful ways that governments can promote e-business, is for government itself to be exemplary in its adoption and deployment of new technologies and electronic media. By promoting e-government, government can also facilitate an active and engaged citizenry which will lead to a more efficient and representative government.
Thirdly, in most countries, government is the largest interactive force in the lives of business and consumers. It conducts a large number and variety of transactions every day. Governments will increasingly meet the needs of business and ordinary citizens by offering their services online. Services need to be user friendly and citizens need to have confidence in the system. In this process, governments need to be careful to protect their brand and credibility. For example, the US Government generated $US 2.6 billion on its web site in 2001, making it one of the largest earners.
Fourthly, there is likely to be growing pressure for governments to provide more and more services online and for those services to be easier to use and allow for greater citizen engagement. For a start, citizens as consumers of government services will increasingly expect major services to be available online. Also, pressures for governments to do more with less will force governments to look to information communications technology (ICT) as a means of increasing efficiency and productivity. Finally, e-government is seen as a key factor in increasing the overall competitiveness of the economy.
Leading countries in e-government tend to share a number of characteristics. They have a vision of effective policy leading to e-government and the requisite resources and change management skills to implement it. They are citizen-centric or customer-focused with government portals organised around the needs of users rather than traditional departmental hierarchies. Leading countries have also devoted sufficient research and resources to the task of achieving e-government. Such governments have themselves been exemplary in using information technology and quick to form partnerships with the private sector in achieving goals related to e-government and e-business.
Australia’s most recent vision of e-government is articulated in the Government 2.0 Taskforce Report. This Report provides a very useful guide and recommendations for future Australian developments in e-government. The Report makes ten broad recommendations, the first of which is a call for a move to open and transparent government. This is based upon the belief that information is a key asset, paid for with tax dollars, and should be available to the public. In order to do this the culture of ‘hierarchical control and direction’ needs to give way to a new model of participation, innovation, value adding and creativity. Through such a vision it is argued Australia will be able to:
revitalise our public sector and make government policies and services more responsive to people’s needs and concerns by:
• providing government with the tools for a much greater level of community engagement
• allowing the users of government services much greater participation in their design and continual improvement
• involving communities of interest and practice outside the public sector — which offer unique access to expertise, local knowledge and perspectives — in policy making and delivery
• more successfully attracting and retaining bright, enthusiastic citizens to the public service by making their work less hierarchical, more collaborative and more intrinsically rewarding.
As shown below, the NECS incorporates each and all of these goals.
With Australia’s growing participation in a global economy and need to achieve maximum efficiency, the move in Australia by the National Electronic Conveyancing Office to develop a national online conveyancing system is a vital one. NECS was created by Australian state and territory governments in 2005. This development is significant because property transactions are one of the most important and pervasive commercial activities engaged in by almost all Australians at some time in their lives.
The NECS involves the creation of an online system that will enable conveyancers, legal practitioners, financial institutions, mortgage processors and other players involved in conveyancing to access the NECS online with an electronic workspace provided for each property transaction. As detailed below, such a system will save time, enable all stakeholders to share the same electronic workspace, save on travel and other delays, and greatly facilitate real estate transactions of all kinds.
Specifically, the aim of electronic conveyancing is to develop a system that will enable practitioners electronically to:
• prepare land title deals and related instruments needed to register changes in property ownership and interests
• settle financial transactions (ie exchange property settlement monies including payment of duties, taxes and disbursements)
• comply with the tax and duty requirements of the relevant State or Territory revenue office
• lodge land title instruments for registration with the relevant State or Territory land registry
• receive prompt confirmation of the lodgement and registration of land title instruments.
Although other functions may be added later, in this first stage of development, the National Electronic Conveyancing system will not provide for:
• advertising and promotion of properties for sale
• procurement of suitable properties for purchase
• vendor disclosures prior to sale
• preparation and exchange of contracts of sale
• pre-settlement investigations by the purchaser
• due diligence investigations for transaction completion
• recovery and disbursement of purchaser deposits held by real estate agents
• hand over of property keys
• procurement of any insurances required by purchasers
• creation and completion of loan documentation, including guarantees
• processes for examining and registering instruments once lodged with a land registry.
• Revenue Office practices for compliance checking of transactions after instrument registration
• financial institution practices for assessing, approving, insuring, servicing and recovering mortgage loans.
Sharing in and contributing to this vision of a national e-conveyancing system are many direct and indirect stakeholders. The direct stakeholders include:
• Financial institutions
• Developers of new estates, divisions
• Owners, vendors, lessors/ees
• Conveyancers & solicitors
• Caveators who use the conveyancing register to protect their interests
• Registered surveyors, law agents
• Insurance companies
There are also many indirect stakeholders who are interested and involved in real estate transactions. These include:
• Law Society
• Office of Fair Trading
• Office of State Revenue
• Mortgage Industry Association
• Commonwealth Government agencies regulating financial products: ASIC, APRA, ACCC
• Regular information user groups: local government authorities, emergency service authorities, land planning authorities, etc.
The involvement of and need to secure agreement from so many stakeholders, each operating under a different legal framework in their particular jurisdiction, is one of the major challenges to be overcome in developing a national system.
The NECS outlines four key stages in the development of its National Electronic Conveyancing System. The first involves an extensive stakeholder consultation in which requirements are identified, governance issues articulated and challenges of planning and implementation are scoped. For example, the NECS has recently received a major report on the legal issues (discussed below) involved in setting up the system. The second stage involves building the system with all of its protocols and features. The third stage involves addressing all of the issues that must be tackled to ready the system, including passage of legislation, process development, support, stakeholder education and training. Finally, a conversion process must take place as practitioners, governments, financial institutions and other participants and stakeholders make ready to transfer what they do to the new NECS environment. While considerable progress has been made on each of these stages, e-conveyancing is most advanced in Victoria which has gone ahead with its own system which it hopes will be adapted as the national system. Unfortunately, there has been significant opposition from two key stakeholder groups, the banks and the solicitors. The banks want a national system and it is uncertain that the Victorian system or major parts of it could service a national system. The solicitors are concerned that the system will result in the potential for increased legal liability on their part. Effective July 2010, leadership and management of the NECS project moved to a new commercialisation and implementation phase under the guidance of a newly formed National E-Conveyancing Development Limited (NEDL), a corporation formed by the three most populous states: Victoria, NSW and Queensland. It therefore seems that the biggest challenge facing the further development and implantation of the NECS is political, ie convincing key stakeholders (governments, professions and industry) that the system will be to their advantage. On 21 February 2011, the NEDL announced board approval of its first development plan which will include, inter alia, identification of business requirements of system stakeholder groups, looking for commercial partners, and building the national e-conveyancing system platform.
Conveyancers, legal practitioners, financial institutions, mortgage processors and other players involved in conveyancing would access the NECS online with an electronic workspace provided for each property transaction. The system will allow users to provide, secure, certify and sign documentation that will be used to update the Torrens Title Registers in each state and territory. This will involve the issuance of Digital Signature Certificates (DSCs) issued under the Australian Government’s Gatekeeper Framework which will ensure authentication and prevent repudiation. Additionally, various risk mitigation and fraud prevention measures will be taken. Financial settlement will occur through the Reserve Bank’s Information and Transfer System (RITS) with disbursements received promptly and cleared for reuse. The State and Territory Revenue Offices will receive duty and tax payments electronically as cleared funds from the settlements through the NECS. Consumers will authorise their practitioners to use NECS on their behalf and be able to track the progress of their transaction via limited Internet access to the NECS. Financial institutions will be able to integrate their services and mortgage documentation systems with the NEC system.
Achieving a NECS is a significant step towards achieving Australia’s goals of both e-government and e-commerce. It is an objective of both e-government and e-commerce to structure transactions electronically so as to maximise efficiencies and information accessibility while at the same time minimising or eliminating the costs and inefficiencies of a system that relies on paper documents. The ability to store as well as retrieve records electronically saves time, space, and personnel and permits more advanced, interconnected uses of the information contained in the documents. Reports from early adopters and pilot programs suggest that these administrative cost savings will be real and significant.
The system of land registry will gain efficiencies (fewer errors and quicker processing) in operations and linkages with other commercial and governmental systems. The availability of online settlement will save the costs of attended settlements, eliminate the need for paper financial transactions and the losses that come when a settlement falls through. Another benefit is that the NECS will close the gap that often arises between settlement and lodgement, resulting in fewer priority issues arising from conflicts between unregistered interests. Other cost savings from increased efficiency and speed of electronic transactions should reduce the originating lender’s cost of money. Further cost savings, important to the management of a large volume of sophisticated transactions but difficult to monetise, will come from the improvements in reporting, oversight, and compliance made possible by electronic documents.
With fewer hands involved in paper documentation and greater transparency overall, it is also hoped that fraud can be reduced. The NECS will allow users to provide, secure, certify and sign documentation. A national electronic system of land administration will also enable Australia to link various data sets so that greater coordination and planning among government departments and the private sector may be achieved for the management of Australia’s land resources. More than this however, the lessons learned from designing, implementing and evaluating this project will be useful in the design and implementation of other e-government projects that are to come as Australia seeks to become a competitive player in a global Information Society.
Consumers will authorise their practitioners to use NECS on their behalf and be able to track the progress of their transaction via limited Internet access to the NECS.
Financial institutions will be able to integrate their services and mortgage documentation systems with the NECS.
Using the documents in their original electronic form will create numerous efficiencies, generate significant cost savings and greatly improve the accessibility and usability of the public real estate records for multiple parties.
The NECS will facilitate the trend toward nationalisation and internationalisation of the real estate industry. It will give consumers greater choice and is likely to encourage new models/products leading to lower costs and still greater efficiencies. Finally, the NECS will make Australia more competitive in international markets
The legal framework supporting the NECS provides an example of the creative and practical role of law in providing the infrastructure upon which the promise of a more efficient, transparent and effective system of electronic conveyancing becomes a reality. This requires a convergence of legal, political, economic, strategic and information needs. Designing and implementing such a system requires input and buy-in from many stakeholders, in every jurisdiction, across different registry systems and across many subsystems of law, risk management, project management, politics, technology, and involving partnerships among diverse groups including private and public sectors the profession and all stakeholders.
The NECS Legal Framework seeks to accomplish five major objectives. Paraphrasing the Report, these are to:
1. Realise efficiencies by achieving broad uniformity across all jurisdictions, yet maintain flexibility to account for necessary variability to reflect the different laws in particular jurisdictions.
2. Achieve, at a minimum, in this new online environment the same level of security and confidence as presently exists in the paper-based system.
3. Design of a legal framework that is clearly articulated, fair, comprehensive and provides adequate guidance to all parties involved.
4. Devise conduct and liability rules that are clearly expressed, specific and fair, with transparent and clear duties specified for the various parties that are part of the system.
5. Develop a legal framework that is generally acceptable to NECS Stakeholders.
Critical to the development of a national electronic conveyancing system is the design and implementation of the legal framework that would pull together legal requirements and gain commitment to a central system from Australian states, territories and the federal government as well as all of the stakeholders such as banks, conveyors, lawyers and those in the real estate industry. This framework would rely on a combination of legislation, administrative instruments under a statutory power, rules incorporated in contractual agreements and various industry protocols.
In January 2009, the law firm, Clayton Utz, was engaged to determine the purpose and performance objectives of a single national Legal Framework for the National Electronic Conveyancing System (NECS) based on the National Business Model (NBM) for NECS and to scope and describe the components of the Legal Framework. Under the NECS, each state and territory will authorise one or more ELNO to electronically lodge instruments (and associated data) for registration with the state or territory's Land Registry. This will include the provision of a facility for real time electronic funds transfers to effect financial settlement of conveyancing transactions.
The plan is to start with one national ELNO, operated by a company owned by all of the jurisdictions which will be authorised to operate an electronic lodgement network for land in each of the jurisdictions. The goal is to develop a system that has, at the very least, the same level of assurance against fraud, as the present paper-based systems that operate in the various jurisdictions. The recommended legal framework consists of broad legal instrument/systems agreement, inter-governmental compacts and various administrative instruments issued and approved by a statutory administrative authority. This is designed to enable maximum flexibility and adjustment as required while keeping the broad parameters of the system intact.
A basic outline of the legal framework is presented in the Report and includes the following elements:
(1) Enabling legislation which will validate the electronic lodgement with a Land Registry by an authorised ELNO of digitally-signed Registry Instruments (digitally signed by or on behalf of Transacting Parties) and the registration of those Instruments by a Land Registry on the Register on a basis equivalent to the registration of manually-signed paper instruments. This legislation will also empower a ‘Jurisdiction Authority (JA) for the jurisdiction to authorise the operation of ELNO(s) which can electronically lodge Instruments with the particular jurisdiction’s Land Registry on conditions.’
(2) Authorisation issued by a JA to an ELNO to electronically lodge Instruments and data with the jurisdiction’s Land Registry. The authorisation will spell out conditions regulating the ELNO and the persons entitled to use the ELNO’s services to create Instruments and regulate how those services may be used. The JA will do this by requiring the ELNO to comply with specified Operating Requirements and ELNO users to agree to a Participation Agreement and Rules governing the operation of the ELNO.
(3) Operating Requirements will specify the ‘details on admission, suspension and termination of the authority to operate, the continuing eligibility requirements to be an ELNO and reporting requirements and will incorporate the business rules. Data and Communication Protocols for communication between the ELNO and the jurisdiction’s Land Registry (including lodgement of instruments, and supporting legal data, pre-population of Workspaces, Workspace content verification and lodgement acceptability checks).’
(4) ‘Participation Agreement and Participation Rules will determine key aspects of the legal relationships among an ELNO, its Subscribers, Certifiers used by Subscribers, and Clients represented by Subscribers. The JA's condition on authorisation will require the ELNO to have all its relevant users (initially Subscribers and Certifiers) agree to use the ELNO on the terms of the Participation Agreement and Participation Rules. The Participation Agreement and Rules may be extended to cover other users of ELNO services such as LSPs if appropriate.
The Participation Agreement and Rules are the source of other key elements of the Legal Framework:(a) the Client Authorisation Agreement which must be used between a Representative Subscriber and its Client to authorise the Representative Subscriber to sign Instruments on the Client's behalf;(b) Requirements on Subscribers to conduct Client Identity Verification (CIV) and retain supporting evidence of CIV, Client Authorisation and the transaction underlying a lodged Instrument; and(c) Requirements for Certifiers to certify matters on their own behalf and on behalf of Subscribers for whom they act in respect of Instruments and other documents and statements.
(5) Inter-governmental Arrangements to achieve uniform regulation of ELNO(s) and Subscribers and NECS transactions.
These arrangements will consist of:(a) an Inter-governmental Agreement (IGA) among all jurisdictions; and(b) an inter-governmental Jurisdiction Officers Group (JOG), the goal of which is to ensure uniform enabling legislation, national and uniform Operating Requirements for each ELNO, and authorised by each local jurisdictional authority and the imposition of a uniform Participation Agreement and Rules subject only to the variations required by specific jurisdictional legislative requirements related to land registry.
There are several additional elements of the legal framework. Again paraphrasing the report, these include:
(1) ELNO licence to Licensed Service Providers (LSP) to access and use the ELNO’s services. Contract between the LSP and Subscribers for use of LSP services
(2) Contract terms between a Subscriber and Certifiers used by the Subscriber. The report recommends leaving these first two components of the system to market forces and the general law.
(3) Insurance contracts covering Subscribers, Certifiers and ELNO(s).
(4) Licensing and professional conduct rules to apply to lawyers and licensed conveyancers.
(5) Contracts between the Gatekeeper Certification Authority/Registration Authority (CA/RA) and subscribers for DSCs (these will usually be NECS Subscribers, their Authorised Officers, Certifiers and the ELNO).
(6) Contracts for sale of land, loans and mortgages and payment services.
(7) Service agreements between the ELNO and the Financial Settlement Manager (FSM) to cover settlement of Workspace transactions.
(8) Agreement between Land Registry and ELNO for collection of fees by ELNO on behalf of Land Registry (much of the relationship between the Land Registry and ELNO will be controlled by the Operating Requirements imposed on the ELNO by the JA as a condition of its authority to operate in the jurisdiction).
(9) Existing legislative framework, including the legislation governing duties and Torrens registration, and legislation regulating lawyers and licensed conveyancers.
(10) Existing contracts relevant to conveyancing eg:
• contracts for sale of land;
• contracts for loan and mortgage of land; and
• contracts for service between lawyers or conveyancers on the one hand and clients on the other.
In addition to specifying the legal requirements mentioned above, the report also covers other important components such as the rules regarding digital signatures. The Report recommends a system of public key cryptography (Gatekeeper) developed by the Australian government. Digital signatures will enable parties to digitally sign instruments, statements or reports and lodge them onto the NECS Workspace. Software will verify that the document has not been altered since it was signed. However, this only signifies that the private key was used to create the digital signature on behalf of a particular person, ‘[t]here remains a possibility of repudiation of the digital signature.’
To deal with the repudiation problem, the Report recommends a number of attribution rules that, supported with general agency law principles, will protect those who rely on the system such as Land Registries, financial institutions, certifiers. Others who control the technology will develop a set of risk management, insurance and indemnification rules that will enable them to allocate the risks as appropriate and ensure a high level of confidence and certainty among users of the system. This will include design of standards to be followed by all subscribers to the system, certification of instruments and reports, establishment of standards for keeping private signing keys secure, permitted liability limitations for the ELNO under Participation Rules that will have to be developed and the formulation of a Service Charter with detailed obligations spelt out for Subscribers, Certifiers and all who participate.
Insurance and risk management are important components of the proposed legal architecture. The Report seeks to place the risks in the hands of those in a position to best manage them. It is also important to devise insurance coverage and a compensation scheme to cover losses arising from negligence or malfeasance of conveyancing professionals so that all of the users and stakeholders in the system will have confidence and certainty about the NECS and how it will operate. This will require the assumption of the risk by certifiers and others in the system and establishment of insurance coverage at various levels throughout the system with a minimum goal to achieve the same level of confidence that exists with the present paper-based system. This in turn means that the system will have to be adaptive and flexible in benchmarking and anticipating fraud risks, such as identity theft as well as other risks such as viral attacks on a changing information communication technology system. The system will also have to adapt to a rapidly changing legal landscape taking into account new statutory developments (eg legal reforms in consumer law, electronic transactions, privacy, and computer crime) as well as the continued extended applications of traditional doctrines so that they may account for new realities, (eg negligence, breach of confidence). Finally, the system must create and achieve an effective governance model consisting of a broad and flexible framework coupled with detailed rules, standards, relationships, protocols, contracts, administrative guidance and culture to ensure that project objectives are realised.
A national system of electronic conveyancing will require significant inter-governmental cooperation. The Report recommends a formal Inter-governmental agreement. Such an agreement would have the following features:
(a) [It] ...would be entered into by all of the States and Territories by being executed either at head of government level or Ministerial level by each jurisdiction. (The Commonwealth may or may not be a party to the IGA, depending on matters such as funding and the extent of formal COAG involvement.)
(b) The IGA would recite that the jurisdictions have agreed to work co-operatively to implement enabling legislation of uniform operation and effect for NECS, and particularly to give the relevant Jurisdiction Authority in each jurisdiction the power to authorise and regulate the operation of the ELNOs on a uniform basis across all jurisdictions.
(c) The IGA might establish a Ministerial Council (or more likely give powers to an existing Ministerial Council such as the Standing Committee of Attorneys-General) in relation to the IGA.
(d) The IGA would establish a Jurisdiction Officers Group (JOG) comprised of Registrars/Heads of Department/comparable officers from each jurisdiction. A JOG would be given primary responsibility for ensuring that the terms of the IGA are complied with on a day-to-day basis.
(e) The IGA would require the JOG to convene an ELNO User Advisory Committee comprised of key user groups (eg financiers, conveyancers, lawyers). The User Advisory Committee would need to be consulted by the JOG in respect of the content of the Model Participation Agreement and Model Participation Rules (and amendments to those documents from time to time) and would provide non-binding input to the JOG before the JOG makes its determinations.
(f) The IGA would also require the JOG to consult with the ELNO(s) who has/have been authorised to lodge digital instruments by the JAs in each jurisdiction in respect of the content of the Model Operating Requirements including the Data and Communications Protocol and the Model Participation Agreement and Rules (and amendments to those documents from time to time). The ELNO(s) would provide non-binding input to the JOG before the JOG makes its determinations.
(g) Each jurisdiction government will agree not to seek or support amendment of the uniform enabling legislation except as agreed by the Ministerial Council (usually after a recommendation by the JOG).
(h) It is envisaged that once model operating rules are agreed by the JOG, a jurisdiction will only be able to amend those model rules (as they apply to ELNOs operating in that jurisdiction) with the agreement of the JOG.
As mentioned above, however, the greatest concern is winning the support and cooperation of key stakeholder groups, especially the legal profession and banking industry.
Some writers argue that law is not a solution to the challenges facing e-government, it is part of the problem. In The Laws of Disruption, Downes argues that most regulatory schemes for cyberspace just don’t work. Downes examines security, privacy, copyright, and other areas in demonstrating that while technology changes exponentially, legal systems change only incrementally and will increasingly lag behind. Downes suggests that technology developments will turn upside down our traditional legal system based, as it is, upon realities of an earlier Industrial Age that no longer exists. Downes’ concerns raise an important caution that achieving significant e-government reform is difficult and it must be acknowledged that much remains to be done before the NECS becomes a reality. In addition to winning the support of key stakeholders, some of the remaining concerns include:
• adverse legal interpretations of the rules;
• evidentiary requirements for transferable records;
• security during transfer of transferable records between systems;
• security, preservation and maintenance of transferable records during long-term storage in systems;
• ensuring that the system meets the needs of users;
• ensuring that the system does not create significant new risk; and
• dealing with the effects of implementation of technological advances on transferable records created using older technology.
These challenges are not unique to the NECS and it is the author’s view that these issues can be and hopefully will be resolved.
Over the next decade, Australia will no doubt continue to pursue additional and major e-government initiatives. In this regard, the NECS provides several valuable lessons that will serve as a useful guide for these future e-government infrastructure projects.
Property conveyancing and mortgage financing system/procedures are of major importance to the regions of Australia. In contrast to their civil law counterparts, lawyers in the common law tradition are hard wired to think of individual cases and particular instances. Lawyers also typically look to the past and legal precedent as a way of resolving present matters. Creating the legal architecture for e-government, however, requires a different mind-set and approach. This approach is characterised by design thinking and working together with professionals from diverse disciplines to design a new legal infrastructure that is part of the wider framework for e-government. In general, the design elements would include: 1) a shared vision about e-government; 2) an assessment of e-readiness and a clear understanding of what needs to be done to realise the vision; 3) setting of realistic goals and a project plan to reach those goals; 4) leadership evidenced by the commitment of senior people, resources and change management strategies for all levels of the project; and 5) formation of necessary public and private partnerships involved.
If law is to be relevant to and keep up with this new e-government environment, it is important to see law as part of a wider system with many parts that must converge if e-government is to succeed. Some of the components of this system include:
1. Strong legislative foundation lest transactions be open to challenges and lawsuits.
2. Authentication and eligibility—only authorised and eligible parties should be given access to the system.
3. Accuracy, Confidentiality, Security, Privacy: data are accurately recorded, confidentiality is assured, records are secure and privacy of parties is protected.
4. Integrity: documents that are forged, modified or deleted should be detected.
5. Verifiability and auditability: verification that all the parties have been accounted for and that reliable and authentic records exist.
6. Risk management: risks identified and an appropriate balance between facilitation and controls is achieved.
7. Reliability: ensure against loss of data by failures in the system.
8. Flexibility: should allow for a variety of platforms and technologies and be accessible to all, including those with disabilities, those in remote locations.
9. Efficiency: based upon sound principles of knowledge management, sharing of data and maximum leverage of information.
10. Scaleability: the paperless system of e-government should be able to be easily scaled upwards as e-government increases across regions and globally.
11. Convenience: users should be able to access it quickly and without undue delay
12. Accessibility: regular consultation and review by stakeholders/users to ensure the system meets the individual and collective needs of the community of users.
13. Transparency: parties should be able to possess a general understanding of the process and not be deceived in any way.
14. Historical accuracy; document retention: the system should have a way to record and accurately capture documents that are born digital and at the same time go through various iterations before getting to the final product. Documents should be captured at key points in the process and the system must be able to replicate those documents even though advances and changes occur in the technology and platform used.
15. Verifiability: the system should be regularly tested and certified to ensure against failures.
16. Cost-effectiveness: the system should be affordable while being efficient and effective.
17. Interoperability: the paperless system should be able to be integrated with systems operating in other countries using agreed standards for document and data classification.
18. Evaluation: regular evaluation is built in so that the system is constantly improved as well as benchmarked against the best systems anywhere.
Achieving e-government is always a work in progress, a never ending journey. Perfection is never reached and progress is always ongoing. As Reinhold Niebuhr noted, ‘[d]emocracy is finding proximate solutions to insoluble problems.’ Commitments to major infrastructure, such as the National Broadband Network and the NECS, also require broad political support if they are to succeed. Where the major political parties are highly polarised and majority votes are thin, it may be impossible to receive sufficient consensus for long-term projects such as those required for public infrastructure investment.
It is also true that in initiating such projects, sometimes slower is faster. Taking shortcuts can be disastrous. A recent example, and yet another consequence of the sub-prime crisis in the US, is the hasty move by banks and other lending institutions to save time and money by recording mortgages electronically and using cloud computing without sufficient precautions. The banks instead digitised mortgage titles into a privatised system, called the Mortgage Electronic Registry System (or MERS). Real estate documentation of sales was arranged by simply trading Excel spreadsheets among the banks and trusts, rather than endorsing the notes as required by their own contracts, by state real estate law and by IRS rules. Presently, banks are finding it difficult or even impossible to successfully execute foreclosure proceedings because of the failure of the electronic shortcut called MERS. It is estimated that 60 million properties are recorded under MERS — 60% of the mortgages in the USA, and 97% of the loans made between 2005 and 2008.
E-government projects such as the NECS are also about competitive advantage in an Information Age. In addition to reducing costs, the creation of the NECS will facilitate Australia’s participation in a global market for mortgage backed securities and thus attract capital into and make capital more readily available to Australians. Australia, in the NECS process, has also taken note of similar developments in the UK and other countries.
Another important lesson for future e-government initiatives which are large projects and involve multiple stakeholders in government, industry and the professions, is that excellent project management and a focus on process are vital components. The NECS is exemplary in the way it has engaged stakeholders and mapped both the legal design and implementation strategies throughout. As the NECS project moves now to the costing, commercialisation and implementation details phases, further and even more intensive stakeholder engagement will be required with industry, governments and consumers as this project competes with other local and national priorities.
Good governance starts with effective leadership by talented people. The NEDL is led by Alan Cameron who has been the managing partner of Blake Dawson, one of Australia’s major law firms, as well as former Chairman of the Australian Securities and Investment Commission. Mr Cameron has brought together an excellent and experienced team to lead the NECS through its next phase.
One of the major challenges in achieving a national system of conveyancing is Australia’s federal system in which property law is governed by the differing laws and administrative structure of each state. Notwithstanding the fact that property transactions have a long history of local control, as real estate markets become increasingly national and even international and as all governments look for greater efficiencies and reduction of costs, there is an increasing incentive to cooperate in the creation of a national legislative regime such as has been done with the regulation of corporations, consumer credit, competition and consumer law. In this process of cooperative federalism, the establishment of the Council of Australian Governments (COAG) which is the peak intergovernmental forum in Australia, comprising the Prime Minister, State Premiers, Territory Chief Ministers and the President of the Australian Local Government Association (ALGA). Given the challenge of Australia’s fragmented system and conflict of laws inherent in a federal system of government, a framework and sound project management implementation have been major factors in the success achieved thus far.
While Australia’s federal system presents a challenge, it also is strength in that Australians are ‘hard-wired’ to work across different legal systems and have it in their DNA to deal with conflicts of laws. Models of e-government implementation around the world have swung between centralised and decentralised operating models and governing frameworks. The Australian NECS system is a hybrid between the two and hopefully captures the strengths of each. At the top of the NECS is a ministerial committee that gives high-level strategic leadership to ensure the basic framework is in place. In the middle is the operational level which is appropriately decentralised and distributed amongst the various jurisdictional hubs. At this level, standards, protocols and daily operations will be enforced and adapted as needs change. Finally, at the bottom, are all the many stakeholders who will be using the system on a daily basis. As noted above, the NECS involved numerous stakeholders who are directly and indirectly impacted by the creation of a national system. Such consultation is vital if the NECS is going to work effectively and be accepted by the many and diverse users of the system.
Another commendable feature of the NECS is its mix of over-arching broad principles and detailed protocols and standards. The broad framework of over-arching principles is found in the inter-governmental agreements, legislation to be adopted in every Australian jurisdiction. The practical detail required to make e-conveyancing work will be found in the administrative regulations, protocols, standards, procedures and guidelines to be established for those who use the system. Just as our society is governed by legal rules and non-legal rules in the form of guidelines, standards, and culture, so too, the NECS uses this mix of formal and informal rule-making so that a balance is achieved between certainty and flexibility or system adaptability.
Change today has joined death and taxes as certainties in life. Accordingly, it is important for an e-government project to build in flexibility and adaptability. Again, we see many features of this in the NECS framework. For example, administrative rule making is deliberately deployed so that rules can be altered quickly and easily as circumstances require. Similarly, the use of standards and protocols, as mentioned above, provide an element of flexibility as these ‘rules’ can be changed quickly to meet the needs of the program. Other flexibility is found in the administrative arrangements with a built in governing council representing all jurisdictions so that problems can be identified early and the project kept on track.
The creation of e-government is not a job solely for ‘lawyers,’ but requires a close partnership among various disciplines if it is to succeed. Too often the legal team is brought in at the end of a project when it is too late to provide legal input into the design stages of the project. The NECS wisely and from the beginning engaged a team from government, industry, IT, legal and other groups. This requires participants who have excellent collaborative skills, understand and respect other disciplines and can think strategically. The team has to be unified in its vision of what needs to be done and have the resources, processes and commitment to work it out and get it done.
In the rush to meet deadlines, there is a temptation to attempt too much too soon. Thus, an important element in the NECS design is to pilot the program at various stages, get feedback from the prototype and use it to adjust as required before launching a system more broadly. Hopefully, the early lead by the Victorian government in this case will be able to be scaled and become a significant part of the national system. That will mean the Victorian investment will not be wasted and the NECS project will be able to advance at a faster and more efficient pace.
Finally, it is important to regularly evaluate the system from time to time to ensure that it is meeting the goals established for the project. Depending upon the evaluation outcome, necessary changes can be made as required and a system of continuous improvement achieved.
The Sneddon/Clayton Utz NECS Report and related NECS documentation go a long way to advancing the development of a national electronic conveyancing system. The development of the legal infrastructure, operating rules, management of the legal and operational risks, and creation of an inter-governmental agreement and regular consultation and involvement of key stakeholders are all keys to the future success of NECS. Several challenges, however, remain. These include gaining final sign-off from all the stakeholders involved, determining the actual costs of implementation, resourcing the IT and other infrastructure required by every jurisdiction, demonstrating the cost and other savings, piloting the system, building consumer confidence in the new system (especially in relation to fraud and privacy concerns), and working out the bugs that are part of any new system. Although there is still some way to go considerable progress has been made and the NECS project illustrates both what can be done and how complex and challenging it is to develop the agreements, protocols, safeguards, procedures, and other systems architecture to convert conveyancing to an electronic system and gain the hoped-for speed, efficiency, and enhanced effectiveness and other benefits of e-government. The NECS project has taught and will continue to teach us much about how to make e-government a practical reality. At the same time, challenges remain as we reshape and re-boot major systems to accommodate needs of the Information Age.
[*] Professor of Business Law, School of Business, Griffith University, Gold Coast, Queensland, e-mail: firstname.lastname@example.org. This article is based on an earlier paper delivered to the IEEE eScience 2010 6th International Conference on e–Science, Brisbane, Queensland Australia, December 7-10, 2010: <ftp://pubftp.computer.org/press/outgoing/proceedings/eScience Workshops 2010/data/4295a141.pdf>. The present article focuses on lessons learned from the NECS project that could be applicable to other E-government projects.
 See generally the National Electronic Conveyancing System (2010) <http://www.necs.gov.au /> .
 UK Land Registry, E-conveyancing (2010) <http://www.landreg.gov.uk/e-conveyancing/> .
 J O ’Sullivan, ‘E-Registration and E-Conveyancing in Ireland: The Story So Far’ (2007) <http://www.landregistry.ie/uploadedfiles/conference20071/papers/s3p6.pdf> .
 Kadaster, Dutch Land Registry (2010) E-conveyancing
 National Electronic Conveyancing System (2010) <http://www.necs.gov.au/> .
 See generally, Robert Chambers, An Introduction to Property Law in Australia, (Law Book Co, 2008).
 Alvin Liaw and Guy Eastwood, ‘The Australian Securitisation Market, Australia Prudential Regulation Authority (APRA) Working Paper No 6 (2000) <http://www.apra.gov.au/Policy/upload/The-Australian-Securitisation-Market-Oct-2000.pdf> T G Beale, ‘Development of a Secondary Mortgage Market in Australia,’ (1985) 4(2) Economic Papers 42.
 Michael Bath, Vijay Murik and David Ziegler, ‘Recent Developments in the Residential Mortgage-Backed Securities Market,’ (2007) Australian Office of Financial Management
<http://www.treasury.gov.au/documents/1771/HTML/docshell.asp?URL=Recent_Developments_in_the_RMBS_Market.htm> see generally, S McCracken and A Everett, Banking and Financial Institutions Law (Thomson Reuters, 7th ed, 2009) 179; Christopher Viney, Financial Institutions, Instruments and Markets, (McGraw-Hill/Irwin, 2007).
 National Consumer Credit Protection Act 2009 (Cth).
 See generally, Daniel K Tarullo, Banking on Basel: The Future of International Financial Regulation (Peterson Institute for International Economics, 2008).
 Land Title Act 1925 (ACT), Land Title Act 1989 (Tas); Real Property Act 1900 (NSW); Real Property Act 1886 (SA); Law of Property Act 2000 (NT); Land title Act 1994 (Qld); Transfer of Land Act 1958 (Vic); Transfer of Land Act 1893 (WA).
 Rohan Price and Lynden Griggs, Property Law: In Principle (Law Book Company, 2nd ed, 2008).
 UK, USA and Canada have also made significant strides towards e-government. See generally, United Nations, Division for Public Administration and Development Management, United Nations E-Government Survey 2008 (United Nations Publications, 2008).
 See generally, E Clark, G Cho, A Hoyle and P Hynes, Cyber Law in Australia, (Kluwer Law International, 2010).
 Forrester Research Inc (2000), ‘Sizing US e-Government’, quoted in E-Commerce Times (2000) <http://www.ecommercetimes.com> .
 ‘Forget Amazon, US Inc Is the Net King’, The Australian Financial Review (Sydney), 29 May (2001), 10.
 United Nations Conference on Trade and Development (UNCTAD), E-Commerce and Development Report 2001, 91.
 Government 2.0 Taskforce Report (December 2009):
<http://gov2.net.au/blog/2009/12/07/draftreport/> and Final Report (March 2010): http://gov2.net.au/report/>, see:
 P Dale and J McLaughlin, Land Administration (Oxford University Press, 1999).
 National Electronic Conveyancing System (2010) What’s in
 National Electronic Conveyancing System (2010) National Implementation Strategy <http://www.necs.gov.au/National-Implementation-Strategy-default.aspx> .
 Chris Merritt, ‘Joint Effort to Solve E-conveyancing Puzzle’ The Australian (online), 9 April 2010, <http://www.theaustralian.com.au/business/legal-affairs/joint-effort-to-solve-e-conveyancing-puzzle/story-e6frg97x-1225851583134> .
 NECDL Newsletter, First development steps taken as NECDL looks to the next 180 days (21 February 2011)
 National Electronic Conveyancing System, (2010) <http://www.necs.gov.au/> Verisign, Gatekeeper Digital Certificates (2010)
 Australian Government Department of Finance and De-regulation, Gatekeeper (public key infrastructure) (2010)
 National Electronic Conveyancing System, Risk-mitigation and fraud prevention (2010)
 Australian Payments Clearing Association, Reserve Bank information and transfer system (2010)
 National Electronic Conveyancing System, Revenue Office perspective (2010) <http://www.necs.gov.au/Revenue-Office-Perspective/default.aspx> .
 National Electronic Conveyancing System, Consumer perspective (2010) <http://www.neces.gov.au/Consumer-Perspective/default.aspx> .
 National Electronic Conveyancing System, Financial institution perspective (2010) <http://www.neces.gov.au/Financial-Institution-Perspective/default.aspx> .
 S Stonefield, ‘Electronic Real Estate Documents: Context, Unresolved Cost-Benefit Issues and a Recommended Decisional Process,’ (2002) 24(2) Western New England Law Review 205.
 S Enemark, I Williamson and J Wallace, ‘Building Modern Land Administration Systems in Developed Economies,’ (2005) 50(2) Journal of Spatial Science 51.
 N Gifford, Information Security: Managing the Legal Risks (CCH, 2009).
 National Electronic Conveyancing System, Financial institution perspective, above n 33.
 P O’Connor, ‘Electronic Conveyancing: Who Benefits? (6 June 2006) Monash Centre for Regulatory Studies
 M Sneddon, ‘NECS Legal Framework Development’ Final Report: Vols 1 and 2, Part IV, Clayton Utz Lawyers, National Electronic Conveyancing Office, amended 15 February 2010.
 National Electronic Conveyancing System, National Roadmap documents (2010) <http://www.necs.gov.au> .
 M Sneddon, above n 39, Section 5.
 Ibid, 20.
 Ibid, 21.
 R Low, ‘Opportunities for Fraud in the Proposed Australian National Electronic Conveyancing System: Fact or Fiction?’ (2006) 13 Murdoch University Electronic Journal of Law 225
 Sneddon, above n 39, Section 17.
 Ibid Section 14.
 See Leslie Budd and Lisa Harris, E-governance: Managing or Governing? (Routledge, 2009) 42.
 Sneddon, above n 39, Section 7.2.
 L Downes, The Laws of Disruption, (Basic Books, 2009).
 See generally, S Christensen, ‘Electronic Land Dealings in Canada, New Zealand and the United Kingdom: Lessons for Australia’ (2008) 11 Murdoch University Electronic Journal of Law
 Charles H Koch, Jr, ’The advantages of the civil law judicial design as the model for emerging legal systems’ (2004) 11 Indiana Journal of Global Legal Studies 139 <http://muse.jhu.edu/journals/indiana_journal_of_global_legal_studies/v011/11.1koch.html> .
 See Richard Suskind, End of Lawyers? Rethinking the Nature of Legal Services (Oxford University Press, 2010).
 See Jill Ramsfield, The Law as Architecture, (West-Thomson, 2000); Bela Banathy, Designing Social Systems in a Changing World, (Plenum Press, 1996).
 Charles H Koch, Jr, ‘International Legal Pluralism’ (2004) 25 Michigan Journal of International Law 963.
 The assessment will include, inter alia, people resources, information technology infrastructure (hardware, software, systems), adequacy of existing legal framework.
 See generally, Subhash C Bhatnagar, E-government: From Vision to Implementation: a Practical Guide with Case Studies (Sage Publications, 2002).
 See Clark et al, above n 14.
 See generally, J Satyanarayana, E-Government: The Science of the Possible, (Prentice-Hall of India, 2004).
 Reinhold Niebuhr, Irony of American History (University of Chicago Press, 1952) 12.
 For an analysis of growing political partisanship and polarisation in the US, see Nolan McCarty and Adam Meirowitz, Political Game Theory (Cambridge University Press, 2006).
 Ellen Brown, ‘Shock Therapy for Wall Street: JPMorgan Suspends 56,000 Foreclosures; GMAC and BOA Many More’ Truthout (online) 2 October 2010, <http://www.truth-out.org/shock-therapy-wall-street-jpmorgan-suspends-56000-foreclosures-gmac-and-boa-many-more63803> .
 This reflects the fact that in a global environment, there is a greater willingness of countries to be law takers as well as law makers, ie to look outside and copy or adapt an existing system if that brings a competitive advantage.
 See <http://www.nationaleconveyancing.com.au/> .
 See G Anderson, ‘The Council of Australian Governments: A new institution of governance for Australia’s conditional federalism‘  UNSWLawJl 29; (2008) 31(2) University of New South Wales Law Journal 493; See generally, G Anderson, Federalism: An Introduction (Oxford University Press/Forum of Federations, 2008).
 See <http://www.coag.gov.au/> , (COAG first met in 1992).
 See Richard Heaks, Implementing and Managing E-government (Sage Publications, 2006) 110.
 See generally, Leo Anthopoulos and Anastosios Manos, ‘E-government: Beyond E-administration: The Evolution of Municipal Area Environments Could Establish a Digital Framework of Confidence for Citizens’ (Paper presented at 5th European Conference on E-government, University of Antwerp Belgium, 16-17 June 2005) 401.
 See Patricia Brumfield Fry, James Newell, Michael Gordon, ‘Coming to a Screen Near You—“EMortgages”—Starring Good Laws and Prudent Standards—Rated “XML”’ (November 2006) 62 Business Lawyer 295.
 See Jing Shiang, ‘Change and Adaptation of Stakeholder Relationships in e-Governance’, in Dan Remenyi (ed) 4th International Conference on e-Government, (RMIT: University of Melbourne, 2008).
 See generally Ard Schilder, Government Failures and Institutions in Public Policy Evaluation: The Case of Dutch Technology Policy (Van Gorcum & Comp, 2000).
 Organization for Economic Cooperation and Development (OECD), OECD Government Studies: Belgium (OECD, 2008) 146.
 World Bank Public Sector Board, Reforming Public Institutions and Strengthening Governance, (2000 Public Sector Group: Poverty Reduction and Economic Management Group) 46.
 See eg, Stuart Nagel, Public Policy Evaluation: Making Super-Optimum Decisions (Ashgate, 1998); Evert Vedung, Public Policy and Program Evaluation, (Transaction Publishers, 2000).