SMSF advisers and trustees tempted to cut corners by adding modified pages to amended trust deeds to reflect changes may find this invalidates the entire document, according to an SMSF legal expert.
DBA Lawyers special counsel Bryce Figot said the practice of printing, signing, scanning and inserting modified pages back into lengthy electronic deeds was common, but may not stand up in court.
Speaking during a recent webinar, Figot referred to the view of a leading authority in Australian contract law, Dr Nicholas Seddon, who said: “Would it be sufficient to print out only the execution page and then for each party to execute that page?”
“It is possible that an Australian court would hold that such a practice is not sufficient for proper execution,” Figot added, quoting Seddon.
“A safer practice in Australia is to send the whole deed electronically as one document to be printed out as a whole and executed as a counterpart.”
He said this was not standard practice and single-page changes were often noticeable to others reviewing amended SMSF deeds.
“When I see a perfect PDF document with only one page that has been printed, signed and inserted back in, it is clearly not a scanned complete document and I warn people accordingly,” he said.
He noted the rules around deeds varied across Australian states and rule changes as a result of COVID-19 led to further changes, including the use of electronic documents in some states, but he recommended SMSF trustees act with extra caution and provide extra information on paper-only documents.
“Because you can never truly be sure as to which jurisdiction’s laws govern a deed, the best practice is to ensure you execute a deed in a way that satisfies all jurisdictions,” he said.
“I do want to emphasise this idea of only printing one page out is wrong.
“When you need to execute a paper deed, the best practice is to print the whole deed, even if it’s a lengthy document – the common law hates trees and if individuals are signing, make sure you have an independent witness and ensure the words ‘signed, sealed and delivered’ appear.
“Ensure the words ‘executed as a dated’ appear. Insert the date, it’s not a legal requirement, but you’re going to have a difficult life because bank clerks will insist if there’s no date in the deed, it’s invalid. That’s not true, but try explaining that to people – so just insert the date.”
